Northern Rock press release, 15 February 2008

Northern Rock Plc press release, 15 February 2008
Strategic review update

Revised Restructuring Proposal

The Board of Northern Rock plc (the "Company") confirms that, further to its announcement on 4 February describing the outline terms of a standalone solution for restructuring the Company, submitted to the Tripartite Authorities for funding approval, it has now submitted a revised proposal (the “Revised Restructuring Proposal”). The Board has requested that the Tripartite Authorities consider whether they are prepared to provide funding for the Revised Restructuring Proposal on the basis previously announced by them.

The Revised Restructuring Proposal reflects changes designed to address certain aspects of the original proposal raised by the Tripartite Authorities. It does not involve any significant change to the underlying business plan, which continues to show a controlled reduction in the assets held on the Company's balance sheet and a resulting reorganisation of its operations, before returning to modest growth in prime quality lending in line with the Company's ability to raise retail and wholesale funds.

The key changes in the Revised Restructuring Proposal are as follows:

• An equity raising being now not less than £700 million (which again would be conditional upon EU state aid approval)
• An improvement in the economic returns to HM Treasury and the Government for providing ongoing financial support to the company.

The Board continues to believe that the Revised Restructuring Proposal, once implemented in full, will result in an independent, well-capitalised, low cost and low risk mortgage and savings bank. The Board also believes that the Revised Restructuring Proposal is capable of meeting all the objectives publicly announced by the Tripartite Authorities.

There can be no certainty that the Revised Restructuring Proposal will be supported by the Tripartite Authorities, or that it will be selected by the Board as the best option for the Company following a further review of other proposals received and further discussions with the Tripartite Authorities. In addition, requisite shareholder and third party consents may be required for implementation of the Revised Restructuring Proposal. These consents include, but are not limited to, the approval by the EU Commission in respect of any state aid involved in the Revised Restructuring Proposal and the associated financing arrangements.