The UK government’s trade secretary has said that a £40 million support package has been put in place for firms that supply MG Rover as the car maker’s 6,000 workers wait to find out if any parts of the stricken firm can survive.
MG Rover directors announced at lunch time Friday that they are putting the automaker into administration.
The BBC said the company called in financial advisers on Thursday amid reports it was on the verge of collapse after talks with a possible Chinese investor broke down and worried parts suppliers stopped shipments after yanking credit, forcing the Longbridge assembly lines to halt.
Industry analysts had told the broadcaster MG Rover’s demise may be inevitable.
“I think it’s a given that there will be some form of insolvency proceedings,” Ian Gould, corporate recovery specialist at PKN told the BBC.
Latest reports said trade and industry secretary Patricia Hewitt had visited Rover’s plant on the outskirts of Birmingham on Friday morning and talked to workers.
Earlier, she told the BBC that the government had made the £40 million support package available to Rover’s suppliers in an effort to help them “find new business and secure their future”.
She also pledged to do “absolutely everything I can” to help Rover’s workers and other jobs in the area reliant on the company’s business, the report added.
BBC correspondents have said the fate of the firm, supported by successive governments, looks likely to become an issue as the UK gears up for a general election on May 5.
The BBS noted that Ms Hewitt was the first on Thursday evening to suggest the firm had called in administrators or receivers, while union leaders said they had been told the same thing by Rover’s management, but, late on Thursday night, MG Rover told the BBC’s business editor that it was not in administration and that Ms Hewitt’s statement had been premature.
It reportedly said it had simply invited accountants PricewaterhouseCooper to advise on its position.
The BBC noted that the UK government has been in intensive talks with both Rover and potential investor Shanghai Automotive Industry Corp to try to secure the firm’s future – a bridging loan was on offer, but only for a year and a limited sum – whereas Shanghai Automotive would complete the rescue only if Rover’s solvency was guaranteed for two years.
The broadcaster reported that, early on Friday John Towers, the chairman of Phoenix Venture Holdings – the consortium that bought MG Rover from BMW for £10 in 2000 – left Shanghai after the talks broke down, to return to London.
MG Rover calls in administrators
