The Phoenix consortium is refining its plans for carmaker Rover after holding its first talks with Germany’s BMW.
John Towers, the former Rover chief executive who is heading the Phoenix bid to buy the ailing carmaker from BMW, was expected to visit Rover and go through its accounts to hone his business plan before more talks with BMW.
“A whole range of issues were discussed yesterday. A few items have got to be followed up on and that involves getting out onto the ground, doing further due diligence before coming back together again,” a Phoenix spokesman said on Wednesday.
Phoenix has become the last hope for Rover after London investment firm Alchemy Partners unexpectedly pulled out of talks on Friday. But it has to do some tough talking to convince BMW it has the financial strength to take on Rover and keep the carmaker in business for years to come.
BMW will have effectively to pay a bidder to acquire Rover Cars — which is losing roughly two million pounds a day — but it has said it will close the car company within a month if that is a cheaper option.
Closing BMW’s “English Patient” could threaten some 24,000 jobs among the 50,000 people who are employed by or are suppliers to Rover’s Longbridge plant in Birmingham.
NO FINANCIAL DETAILS
Phoenix declined to comment on a story in The Guardian, which said British banks were frustrating Phoenix’s bid by refusing to grant a 200 million pounds overdraft. The newspaper said Phoenix was in emergency talks with Canadian and U.S. banks.
The Phoenix consortium — which groups a director of British car bodies firm Mayflower, two Rover dealers and British racing car group Lola — steadfastly refused to discuss the financial details of its bid.
Talks with initial bidder Alchemy foundered over financial details last week and were reported to have broken down after BMW revealed a new set of liabilities at the last minute that were tied to the sale of Rover.
Phoenix also poured cold water on a story by the Financial Times newspaper, which said Government aid could be blocked by European Union Competition Commissioner Mario Monti.
“The DTI (Department of Trade and Industry) said that no request for money had come from the consortium and I’m not disagreeing with that,” the Phoenix spokesman said.
Towers emerged confident from his initial meeting with BMW on Tuesday that Phoenix could avert the closure of Rover.
“It’s all gone very well for us. Things are moving in the right direction,” Towers told reporters after nearly six hours of talks at BMW’s lawyers’ offices in London.
MUCH MONEY NEEDED
Industry experts say Rover needs some 700 million pounds to sustain its plans to keep its output at about 220,000 cars per year and save thousands of jobs which would have been shed under Alchemy’s ownership.
Unions have been urging the Government to offer Phoenix a 152 million pound aid package, which had been offered to BMW last year to help fund the development of a new Rover model at Longbridge — which employs some 9,000 people.
The Government has not ruled out helping Phoenix financially, but insists that it has no “magic wand” to give Rover a golden long-term future.
“Of course we stand ready to help but there has to be a viable commercial proposition,” Prime Minister Tony Blair told reporters on Tuesday.
Unions say that with government help, Phoenix’s bid would have a good chance of success as the consortium would not face many of the liabilities that were reported to have made Alchemy’s bid collapse — including redundancy payments to employees who would lose their jobs and compensation to dealers who would lose their business.