The famed Austin-Healey brand has been sold to a team of ex-managers of failed MG Rover by the Chinese owner of the company's former assets, the Financial Times (FT) reported on its website.

The report said the sale of the brand was part of a provisional agreement to restart vehicle production at the Longbridge plant on the outskirts of Birmingham, England.

Nanjing Automobile and GB Sports Car signed a memorandum of understanding on Wednesday, people close to both companies told the Financial Times.

The paper added that the move is likely to quell growing concern about the future of the sprawling Longbridge car factory in Birmingham, which has been shut since Rover's collapse in April.

But the FT's sources noted that further negotiations are required before a binding contract can be signed committing the two sides to British car production. A final agreement is understood to be likely within six weeks, assuming legal and financial details can be settled.

"It has taken more time than we wished but we have got to a position where we have got something fairly tangible," one person close to the talks told the paper. "It is a clear statement of intent."

The Financial Times said the agreement to sell the venerable Austin-Healey name suggested that GB Sports could start its own sports car manufacturing even if the deal with Nanjing fails to materialise, and also demonstrates GB Sports' willingness to commit cash to Nanjing, although it is unclear how much the company has agreed to pay.

The danger that negotiations between the two would fall apart came into focus last month when Wang Qiu Jing, vice president of Nanjing, told the Financial Times that he was talking to other possible partners.

The paper noted that GB Sports, which is backed by unidentified US funds, refused to confirm the agreement, saying only: "The talks are progressing well. We will obviously go public when we have got a firm plan for a new business venture. There is still some way to go." The FT could not reach Nanjing for comment.

According to the Financial Times, the revival of the Austin-Healey name was part of GB Sports' unsuccessful bid for MG Rover - it believes the Austin-Healey badge, last used in 1968, still has resonance with drivers.

The paper noted that Nanjing and GB Sports hope to finalise a joint venture that would build the MG TF sports car and ZT saloon in Birmingham and import the rest of the range from Nanjing factories in China.

In addition, the FT added, GB Sports would also have its own business building sports cars under other brands, and is thought to be bidding to buy the former Rover racing division, which owns the SV supercar, from PwC, its administrator.