The largest declared shareholder in Northern Rock said on Saturday it would oppose any deal to restructure or sell the troubled British mortgage lender if it did not deliver value for money to stockholders.
The bank has confirmed it has received 10 offers from suitors interested in taking over the business, which suffered a catastrophic downturn during the recent global credit freeze.
But Philip Richards, chief executive of hedge fund RAB Capital, which holds a 7 percent stake in Northern Rock, said he would vote against any bid that did not offer value for money to shareholders.
"We would vote against any offer which seeks to wipe shareholders out or nearly wipe shareholders out, particularly when we know that there are two good offers out there which could lead to a complete rebuilding of value for all shareholders," Richards said in an interview with BBC radio.
The British government has propped up the ailing business with loans so far totaling ?25 billion (US$46 billion). Chancellor of the Exchequer Alistair Darling has said that any deal for the bank must ensure public money is recouped.
Richards said it would be "totally inexcusable" to deliberately force the company into administration by rejecting a potential offer from a consortium led by Sir Richard Branson's Virgin and another from financier Luqman Arnold's Olivant company.
But both those offers appear to require the postponement or cancellation of interest or the delayed repayment of part of the loan -- effectively subsidizing shareholders at a cost to the public, something the government is under great pressure to avoid.
Both bids offer around ?15 billion back to the government immediately and the rest by around 2010, Richards said.
Asked whether his company would sue the government if it regarded any eventual deal as unacceptable, Richards replied: "If it was outrageous enough, we would have to consider our actions, but it is not our purpose. We don't want to be confrontational about this."
He said the bank was still solvent and a good business despite being gripped by a crisis, which stemmed from its inability to raise short-term credit in the wholesale money market.
"The only problem they have had is on the funding side and that they have not been able to replace the short-term funding which they've needed to replace," he said. "We believe that's been caused by the way the Bank of England handled the interbank market after the crisis broke in the summer."
The Bank of England publicly announced it had lent money to Northern Rock in its position of "lender of last resort." This led to a collapse of the bank's share price and the first run on a British bank in over a century as panicked investors rushed to withdraw money. Experts say about ?2 billion was withdrawn in the aftermath.
The acting leader of the opposition Liberal Democrat party accused Richards of blackmailing the government.
"He is saying `You have to put in more and more money or I will just block any sale that the government plans.' It's an outrageous position for the government to have got itself into," Vince Cable told the BBC.
Cable said the idea of having "some sort of moral obligation" to shareholders like Richards, who speculatively bought into the company after it started experiencing difficulties in the summer, would be "outrageous."