Consortium says funding is ready for Rover buy-out

BMW opens its books as union warns former chief executive not to raise hopes unless he is confident of saving the plant
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The Independent Online

Motor industry unions were assured yesterday by the Phoenix consortium that "most of the money is in place" to enable the group to buy the Longbridge plant.

The promise came as Tony Blair raised the political stakes over possible closure of Rover when he took personal charge of the Government's public response to the crisis.

Speaking ahead of today's talks between Phoenix and BMW, the Prime Minister said he "would work night and day" to save the threatened Birmingham plant. He added that he was receiving constant reports on the progress of the sale.

Over the weekend BMW delivered a five-inch-thick pile of documents for the scrutiny of the Phoenix team after the German company registered its intention to open its books to the bid.

Employees' leaders have warned John Towers, the former Rover chief executive heading the consortium, that he should not raise expectations among Rover employees unless he is confident of being able to mount a serious bid.

In reply, Mr Towers has told unions that his group has all the necessary industrial expertise and that financial institutions are being lined up to provide the necessary funds. Today's meeting with BMW will be critical to the future of the consortium's plans to continue the mass production of cars at Longbridge. The German company wants to make an initial decision on the project by the end of the week and complete a deal within a month.

Mr Blair's intervention indicated just how damaging the closure of Rover would be to his government's credibility amid growing anxiety among ministers about the potential loss of thousands of engineering jobs in the Midlands.

But the Prime Minister stopped short of committing any specific funds to the Phoenix bid, pinning his hopes instead on a private enterprise solution.

He said: "At the end of the day, it has to be a commercial decision for BMW and any potential bidder.

"We will continue to work night and day to secure the best interests of the workers, their families and the West Midlands."

Angela Browning, the shadow trade and industry spokeswoman, said Mr Blair had adopted a "sticking-plaster approach" to the issue, "with everybody sounding concerned but not committing themselves to anything".

But the Prime Minister's comments came amid cautious optimism from unions that there had been a change of attitude at BMW towards the Phoenix bid.

Sir Ken Jackson, the general secretary of the Amalgamated Engineering and Electrical Union, said that the "mood music" coming from the company's Munich headquarters had changed substantially since negotiations with the venture capitalists Alchemy Partners collapsed last week.

Sir Ken pointed out that the German press had been attempting to apply pressure to BMW to save jobs for the sake of the reputation of German industry.

"It is clear that AngloGerman relations could be damaged unless BMW acts with integrity," said Sir Ken. He urged the German Chancellor, Gerhard Schröder, to intervene to ensure that the car manufacturer negotiates in all seriousness.

It is understood that senior union officials are likely to visit Munich on Thursday to press home the Phoenix case.

Roger Lyons, general secretary of the Manufacturing Science Finance white-collar union, urged ministers to be creative when applying the seemingly strict European Union rules on aid to industry.

He urged the Government to use some of the £22bn windfall from mobile-phone licences to save the 10,000 jobs at Longbridge. Other employees' leaders were less ambitious. Bill Morris, the general secretary of the Transport and General Workers' Union, the biggest employees' organisation on the site, said the Government should start by making £150m available to the Phoenix consortium. The figure had been pledged to the German company for investment in new models. "If it's good enough for BMW, it's good enough for Phoenix," he said.

Phoenix is believed to be seeking to raise £700m from potential backers to fund its Rover bid. No precise figure has been given for government aid, but it is believed that an aid figure of £150m is being looked at.

Rover officials were optimistic yesterday about the prospect of progress in today's talks. Mr Towers was well regarded within the organisation, although he ultimately fell foul of Rover's German owners. Sympathisers within Rover also pointed out that under British accounting rules Rover had been profitable until 1997 and started making heavy losses only once it switched to German accounting standards and the pound appreciated.