LONDON - US private equity group JC Flowers has submitted a takeover bid for stricken British home loan provider Northern Rock, a source close to the matter said.
Since the bank was hit by a funding crisis, Northern Rock has borrowed about 25.3 billion pounds (35.3 billion euros, 52.2 billion dollars) in emergency funds from the Bank of England (BoE).
According to the news agency Thomson Financial News, which cited a source familiar with the situation, JC Flowers has offered to repay 15 billion pounds to the BoE, should its bid prove successful.
The rest of the central bank loan would be repaid over the next three years, the source added.
Under terms of the offer, JC Flowers would buy Northern Rock and take it private, investing 1.0 billion pounds into the business.
The bank would continue to operate as a British mortgage lender under the Northern Rock brand.
However, existing Northern Rock shareholders would be offered only a "nominal" sum, the source said, adding that the precise figure has not yet been determined.
Northern Rock, which is exploring takeover proposals and rescue packages, stated Monday that bids received thus far had materially undervalued the company.
Earlier Tuesday, the group's share price plunged to an historic low point of 60 pence as investors feared for the future of the troubled lender. That gave the group a stock market capitalisation of a little more than 250 million pounds (348 million euros, 515 million dollars).
However, the shares later pulled back to stand at 95.60 pence, which marked a loss of 8.25 percent from Monday's close.
London's FTSE 100 index of leading companies, on which the bank is listed, showed a gain of 0.82 percent at 6,170.80 points in early afternoon trade on Tuesday.
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11/20/2007 12:55 GMT