One of the largest US banks, First Union, has offered £200m ($306m) to finance the Phoenix bid for loss-making UK carmaker Rover.
The conditional offer through its UK subsidiary, Burdale Financial, could prove to be crucial for the success of the Phoenix Consortium, led by former Rover boss John Towers.
Rover’s owner, German car giant BMW, has threatened to close down its subsidiary’s Longbridge plant by the end of the month if it cannot find a buyer. Until recently BMW voiced doubts whether Phoenix had enough money to take on Rover, which is losing its German parent about £2m every day.
Closing Longbridge would cost at least 9,000 jobs at the factory, and up to 15,000 at suppliers and in the local economy.
A spokesman for Burndale Financial, said the offer was conditional and subject to ‘due diligence’, an examination of the business plan of Phoenix.
The money is offered as “‘working capital”, i.e. as a loan paying interest and not in exchange for a stake in the company.
Honda rumours denied
Japanese car maker Honda, meanwhile, has denied reports that it has held talks regarding an alliance with the Phoenix Consortium in its bid for BMW’s loss-making Rover unit.
The UK’s Times newspaper reported on Monday that Phoenix had held discussions with Honda and that this could trigger the sale of a transformed Rover to the Japanese car maker.
But a Honda spokesman said: “We have not had talks with Phoenix on Rover, there are no talks on expanding our relationship with Rover, nor are we considering this.”
Analysts believe Phoenix needs £200m on top of the £500m expected from BMW to allow it to continue mass volume car production at the Longbridge factory in Birmingham.
BMW says it will close Rover unless a deal can be reached to sell the company by the end of May.
After a weekend of detailed negotiations between Phoenix and Rover’s German owners, Mr Towers said he had outlined the consortium’s financial backing to BMW officials, who were flying back to Munich to consider the proposals.
Tony Woodley, chief Rover negotiator for the Transport and General Workers Union, said people should now realise that the Phoenix proposal was “viable”.
“While no one expects this new company to become a General Motors overnight, the Towers plan … will maintain a reasonably-sized car producing company making vehicles successfully for at least the medium term, saving and providing work for tens of thousands of people,” Mr Woodley added.
Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said he believed the Phoenix consortium was building momentum and he hoped for positive news from BMW in the next few days.
The Phoenix consortium, which includes a director of UK car bodies firm Mayflower, two Rover dealers and racing car group Lola, has refused to discuss publicly the financial details of its bid.
A dramatic rise in Rover new car sales in April brought fresh hope that the Phoenix bid would be successful.
Figures from the Society of Motor Manufacturers and Traders (SMMT) show that Rover car sales rose by a startling 116.5% to 22,665 units.
The sales increase has been attributed to discounts, but Rover officials hope it signals a wave of patriotic support in the face of the threatened demise of the marque.