JC Flowers, the U.S. private equity firm, made a last-ditch bid Friday to wreck Sir Richard Branson's takeover of Northern Rock after it signaled possible increased payouts for shareholders as part of a revised offer.

The move is likely to heighten tensions between the three main bidders for the bank and the Treasury, which is thought to be keen on a quick sale to close the door on the politically and financially embarrassing episode.
Sources close to Flowers said attempts to sit down with Treasury officials this week had proved fruitless, despite promises from the government that all takeover proposals would be examined.
The Treasury denied this evening that it was reluctant to engage in talks with the Flowers team. ""We stand ready to have discussions with any bidder that meets the principles we set out,"" it said.
Flowers, which was founded by former Goldman Sachs partner Chris Flowers, has threatened to walk away from the deal unless ministers get back around the negotiating table within the next few days. It wants the government to consider a range of options that could be put to the Northern Rock board for consideration alongside the Virgin bid.
Virgin was handed preferred bidder status by the government on Monday giving it a clear run to pitch an offer to the Northern Rock board. The surprise move caught the two other main bidders, Flowers and private equity firm Olivant, off guard.
Ministers, under pressure to relieve the government's growing political problems, were believed to have pushed the Northern Rock board to name a preferred bidder to speed up the process. Opposition MPs have called on the government to take control of the bidding from the Northern Rock board after it was revealed the bank's borrowings from the Bank of England could have reached £30bn. Sources close to the Newcastle based bank have denied it has borrowed more than £25bn.
They argued that the lower figure will remain the total borrowing by the time a takeover is completed, probably in January. Liberal Democrat acting leader Vince Cable said that whichever was the correct figure, the government needed to consider nationalization. He said he was concerned the borrowing was running out of control. He said shareholders holding little more than £50m in equity were determining the outcome when it was the taxpayer that should be dictating events.
Shareholders believe Northern Rock was undervalued by both JC Flowers and Virgin and have demanded a higher value be put on the beleaguered bank.
Activist shareholders, including hedge funds RAB Capital and the Monaco-based SRM Global, have lodged their objections to the Virgin bid and asked the group to increase the value it places on the bank's shares.
A key flashpoint is Virgin's demand that shareholders spend £650m on a rights issue valuing shares at around 25p. The funds will make up half of the equity injected into the bank by Virgin. Shareholders also consider the £250m price tag put on the Virgin Money business, which is part of the deal, to be too high. This evening shares in the bank closed up 1.3p at 118p.
(Source: Guardian)