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Virgin 'to improve' bid for Rock Virgin 'to improve' bid for Rock
(30 minutes later)
Sir Richard Branson's Virgin Group is preparing to make an improved offer for beleaguered lender Northern Rock, according to a newspaper report.Sir Richard Branson's Virgin Group is preparing to make an improved offer for beleaguered lender Northern Rock, according to a newspaper report.
The move comes as the government is set to announce a plan that increases the prospects of a private sector rescue.The move comes as the government is set to announce a plan that increases the prospects of a private sector rescue.
The chancellor will set out plans to turn billions of pounds of state loans made to the lender into bonds.The chancellor will set out plans to turn billions of pounds of state loans made to the lender into bonds.
Virgin is prepared to cut its proposed stake in Northern Rock from 54% to 45%, the Sunday Times reported.Virgin is prepared to cut its proposed stake in Northern Rock from 54% to 45%, the Sunday Times reported.
Such a move would allow existing shareholders more room to share in any recovery in the price of Northern Rock stock.Such a move would allow existing shareholders more room to share in any recovery in the price of Northern Rock stock.
Virgin was not immediately available for comment.Virgin was not immediately available for comment.
On Saturday, Virgin boss Sir Richard said he had a "winnable package" to see his bid for Northern Rock succeed.On Saturday, Virgin boss Sir Richard said he had a "winnable package" to see his bid for Northern Rock succeed.
Deal struck?Deal struck?
Prime Minister Gordon Brown, speaking in India, brushed off speculation that he had struck a deal with Sir Richard, who accompanied him as part of a larger business delegation to China on the first leg of his trip.Prime Minister Gordon Brown, speaking in India, brushed off speculation that he had struck a deal with Sir Richard, who accompanied him as part of a larger business delegation to China on the first leg of his trip.
"I can reassure people entirely that any negotiations about Northern Rock will be taking place in London," Mr Brown said."I can reassure people entirely that any negotiations about Northern Rock will be taking place in London," Mr Brown said.
"If a number of commercial companies are expressing interest in the future of Northern Rock then it's right that the government explore all options available to us.""If a number of commercial companies are expressing interest in the future of Northern Rock then it's right that the government explore all options available to us."
The Olivant group, led by former Abbey boss Luqman Arnold, has also put forward a potential bid.The Olivant group, led by former Abbey boss Luqman Arnold, has also put forward a potential bid.
Chancellor Alistair Darling will make a statement in the Commons to detail the financial plan to convert Northern Rock debt into bonds. Chancellor Alistair Darling will make a statement in the Commons on Monday to detail the financial plan to convert Northern Rock debt into bonds.
An announcement from the London Stock Exchange is also due.An announcement from the London Stock Exchange is also due.
It is expected that bidders will be given two weeks to finalise plans.It is expected that bidders will be given two weeks to finalise plans.
Bonds planBonds plan
BBC business editor Robert Peston says bankers Goldman Sachs have come up with the scheme which has won the prime minister's backing.BBC business editor Robert Peston says bankers Goldman Sachs have come up with the scheme which has won the prime minister's backing.
Robert Peston's blogRobert Peston's blog
It would mean the bonds would stay on the public sector balance sheet until conditions improve in financial markets.It would mean the bonds would stay on the public sector balance sheet until conditions improve in financial markets.
They would then be sold to investors in small parcels every few months.They would then be sold to investors in small parcels every few months.
Speaking in China on Saturday, Mr Brown said: "Now we've been presented with a report that we commissioned from Goldman Sachs and it gives us a number of options for the future.Speaking in China on Saturday, Mr Brown said: "Now we've been presented with a report that we commissioned from Goldman Sachs and it gives us a number of options for the future.
"It's right therefore to have the discussions with the private sector."It's right therefore to have the discussions with the private sector.
"All options, including public ownership, on the road to moving the firm back into the private sector are on the table and are available to the government.""All options, including public ownership, on the road to moving the firm back into the private sector are on the table and are available to the government."
Private bidsPrivate bids
The BBC's business editor says sales of the bonds would take place as and when financial institutions regain their appetite for such investments.The BBC's business editor says sales of the bonds would take place as and when financial institutions regain their appetite for such investments.
The taxpayer will still have complete liability and a private company is going to be invited to take over the bank for a very small price and use it as a licence to print money Vince Cable, Lib Dem MP Nationalisation less likelyThe taxpayer will still have complete liability and a private company is going to be invited to take over the bank for a very small price and use it as a licence to print money Vince Cable, Lib Dem MP Nationalisation less likely
And they would be guaranteed by the government, rather than by a private sector insurer.And they would be guaranteed by the government, rather than by a private sector insurer.
As a result, the Treasury would therefore be funding Northern Rock to the tune of tens of billions of pounds for as long as five years, even if it remains in the private sector.As a result, the Treasury would therefore be funding Northern Rock to the tune of tens of billions of pounds for as long as five years, even if it remains in the private sector.
ConcernsConcerns
The Liberal Democrats' treasury spokesman, Vince Cable, said he would have serious concerns about any private sale of Northern Rock along the lines being proposed.The Liberal Democrats' treasury spokesman, Vince Cable, said he would have serious concerns about any private sale of Northern Rock along the lines being proposed.
He said: "The taxpayer will still have complete liability and a private company is going to be invited to take over the bank for a very small price and use it as a licence to print money."He said: "The taxpayer will still have complete liability and a private company is going to be invited to take over the bank for a very small price and use it as a licence to print money."
Conservative Shadow Treasury Secretary, Phil Hammond, said the plan would not recoup "one penny" of taxpayers' money.Conservative Shadow Treasury Secretary, Phil Hammond, said the plan would not recoup "one penny" of taxpayers' money.
He went on: "We will still be just as exposed but in fact for a longer term period into the future."He went on: "We will still be just as exposed but in fact for a longer term period into the future."
Any deal would have to be agreed by mid-March, which is the expiry date of the European Commission's blessing for the public sector support currently being provided to the Rock.Any deal would have to be agreed by mid-March, which is the expiry date of the European Commission's blessing for the public sector support currently being provided to the Rock.