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April 6, 2005

UK: Chairman says MG Rover and SAIC “committed” to deal

MG Rover and its would-be Chinese partner SAIC are both "committed" to sealing a deal to secure the UK car maker's future, its chairman has said, according to the BBC.

MG Rover and its would-be Chinese partner SAIC are both “committed” to sealing a deal to secure the UK car maker’s future, its chairman has said, according to the BBC .

John Towers reportedly said both sides were working for a “successful outcome” to talks on Rover ‘s future which have been taking place in Shanghai for four days.

However, the BBC noted that Towers gave no indication of whether the two companies were any closer to reaching an agreement.

The broadcaster said there are fears that Rover ‘s fragile financial state could scupper the deal – officials from the Department of Trade and Industry and Shanghai Automotive Industry Corporation (SAIC ) have been in talks about a deal with Rover ‘s owners for the past four days, and the talks had stalled on Monday over fears about Rover ‘s finances, which are reported to have deteriorated in recent months.

“Members of both companies have been working non-stop over the past week to create outcomes for all elements of our complex joint venture agreement,” Towers said, according to the BBC .

He reportedly acknowledged that it was a “worrying time” for Rover staff – the company employs about 6,000 people at its Longbridge plant in the West Midlands.

Noting that the UK government has offered Rover a bridging loan – widely reported to be worth £100 million – to cover its short-term financial needs until it can attract fresh investment, the BBC said the Chinese company is worried about Rover ‘s finances, after a report by accountancy firm Ernst & Young claimed the company was rapidly running out of money, and Rover has been asked to provide extra guarantees about its solvency to satisfy SAIC ‘s concerns.

The BBC said that possibilities include the four members of the Phoenix consortium – which bought Rover from BMW in 2000 – putting more of their own money into the company to ensure the deal goes ahead and Towers reportedly stressed that Rover directors had provided “very extensive” personal commitments to the government regarding the deal.

Talks reportedly stall

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