January 10th, 2008
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Independent.co.uk - Northern Rock and its two biggest shareholders are battling for the votes of small investors who could decide the outcome of the bank’s extraordinary general meeting next week.
Individual investors rarely decide votes at company meetings, which are dominated by giant institutions. But Northern Rock has around 180,000 small shareholders, holding more than 20 per cent of the stock. Many have held shares since the former building society demutualised in 1997.
Northern Rock’s two largest investors, SRM Global and RAB Capital, are appealing to individual shareholders because they know the votes will be tight. Three of their four resolutions require 75 per cent of votes cast to be in favour. To win the votes, they may also need the tracker funds, which usually side with the board, to abstain.
The hedge funds have proposed four resolutions that would limit the board’s ability to sell or buy assets and issue new shares. The funds are trying to stop the bank, which has borrowed more than £25bn from the Bank of England, being sold off too cheaply.
Northern Rock has hired Georgeson, a shareholder relations company, to contact investors ahead of the meeting and advocate the board’s view. Roger Lawson, the communications director of the UK Shareholders Association, said many small shareholders contacted were unhappy about being cold called.
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