On 28 March 2012 we submitted a new unsolicited offer and on 27 April 2012, LBG announcedthe end of the Co-op’s exclusivity. Through May 2012, at LBG’s request, we worked to provideassurances to LBG on three areas of comfort that they sought (on our engagement progresswith the FSA, clarification of certain technical aspects of our offer, and on the strength of ourshareholder support for a capital raise). We were able to provide satisfactory responses on allpoints, sharing with LBG certain reassurances we had received from the FSA about our abilityto proceed to heads of terms. On capital raising:
We provided comfort letters from all our principal investors at very short notice whenrequested.
We offered in writing and verbally for LBG management to meet with our investors(our investors having agreed to such meetings) but this offer was not taken up.
We explored with LBG methods of delivering even more certainty. But LBG had noappetite for such discussions.
On numerous occasions Antonio Lorenzo and Toby Rougier said to Gary Hoffman thatthey “understood exactly where we were in the fundraising process and could not expect morethan we were providing them with at the stage we were at”.As it transpires NBNK were clearly a lot further forward than the Co-op’s fundraising plansand self-evidently than an IPO.On 22 June 2012, we submitted a new and final offer to LBG and on 27 June, LBG announcedthe Co-op was to be the preferred and exclusive bidder.It is important at this juncture to compare the offers made by the Co-op and by ourselves(NBNK). The features of the Co-op bid were as follows:(a)
£350m up front with a further £400m in real terms over a 15 year period dependentupon the future profitability of the branches which had been acquired;(b)
IT and operations would be provided on commercial terms using LBG’s people andsystems.There was no indication, at that stage, that the FSA were content with the Co-op offer.By comparison, our offer was as follows:(a)
£630m-£730m in cash paid in escrow as soon as the sale and purchase agreement wassigned and well in advance of completion;(b)
We stated that we would pay at the top of the range if the figures quoted by LBGwere confirmed by them.(c)
Additionally, we said that there would be a further upward price adjustment of £50mdependent on a number of items that might be included in the package.(d)
We also offered to discuss a further upside for LBG depending on future profitabilityduring heads of terms negotiations.(e)
We undertook to guarantee no redundancies. The Co-op refused to do that.At this stage, we had been advised by the FSA that they were content with the proposals thatwe had put forward up to that point. We had in place a strong and experienced