Virgin Preferred Northern Rock Bidder

The British government has chosen a Virgin Group Ltd.-led consortium as the preferred bidder to rescue Northern Rock PLC, the troubled bank said Monday.

Separately, U.S. investor Warren Buffett and other suitors may join the Northern Rock bidding within the next few days, London’s Telegraph reported.

The Virgin consortium — including New York’s W.L. Ross & Co., Britain’s Toscafund Asset Management LLP and China’s First Eastern Investment Group — would rebrand the bank as part of Virgin Money and repay $22.7 billion of the $51.7 billion the Bank of England lent to Northern Rock on the completion of the deal, Northern Rock said in an announcement to the London Stock Exchange.

The remainder of the money would be paid in due course, Northern Rock said.

The consortium would gain control of up to 55 percent of Northern Rock while existing shareholders would see the value of their holdings diminish to no less than 45 percent, the bank said.

The proposal also includes a new management team led by former Lloyds TSB Group PLC Chairman Brian Pitman as chairman, Virgin Money Chief Executive Officer Jayne-Anne Gadhia as CEO and former Royal Bank of Scotland PLC Chairman George Mathewson as senior adviser.

Shareholders will need to approve any deal. If they reject it, the bank would likely be nationalized or liquidated.

Northern Rock shares were up 33.29 percent or 59 cents to $2.37 a share in late-afternoon trading on the London Stock Exchange after falling 11.5 percent earlier to $1.57.