Directors offer assets but hopes of saving Rover fade

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The dwindling hopes of rescuing MG Rover receded further after Shanghai Automotive Industry Corporation (SAIC) said it was highly unlikely to be interested in a deal with the administrators of the collapsed car maker.

The dwindling hopes of rescuing MG Rover receded further after Shanghai Automotive Industry Corporation (SAIC) said it was highly unlikely to be interested in a deal with the administrators of the collapsed car maker.

A union leader involved in the rescue talks also angered the Chinese by referring to them as "natives". The gaffe, by the leader of the Transport and General Workers' Union, Tony Woodley, came after he had told the workforce at Longbridge there was only a "million to one" chance of talks with SAIC leading anywhere. The administrators of MG Rover, PriceWaterhouseCoopers, indicated that the company was losing £20m to £25m a month and had liabilities in the region of £800m when it collapsed last Friday after SAIC pulled out of a proposed joint venture.

Meanwhile, the four directors of MG Rover's parent company Phoenix Venture Holdings, offered to hand over to PwC the assets of other companies owned by PVH which are not in administration to help buy time for a rescue. The directors put a value of £49m on the assets, which include cash, stakes in car dealerships and Studley Castle.

John Towers, the chairman of PVH, added that if this was not helpful, then the four intended to place their shareholding of the company into the hands of a trustee to be used for the benefit of families of the Longbridge workforce.

However, Tony Lomas of PwC, one of the joint administrators, said: "It remains to be seen if this offer is helpful." He pointed out it might be difficult legally and time-consuming for the PVH directors to do because of claims that other creditors might have over the assets concerned.

In addition to a pensions deficit of about £200m, the car-maker also owes suppliers about £250m and dealers a further £25m. On top of that, it had obligations to pay redundancy estimated at £300m. Most of those liabilities would be avoided by any purchaser who bought MG Rover from the administrators. Mr Lomas said: "There is a possibility our appointment as administrators creates an opportunity to resolve some of the concerns around the previous deal and we seek to engage in discussions with SAIC as soon as possible."

But SAIC, which is the only realistic buyer of the company, dashed hopes that a deal might be resurrected. "It is highly unlikely that SAIC would wish to become reinvolved with MG Rover while it is in administration," said a spokesman. "Buying it as a going concern is not an option we are considering."

Sources close to SAIC added that Mr Woodley's reference to the Chinese as "natives" had been "an extremely foolish move".

The TGWU said Mr Woodley's remarks, at a press conference, had to be seen in context. Referring to the fact that administration had dealt with the pension and redundancy liabilities which put SAIC off an earlier deal, he said: "These things are big scary monsters and we have got to stop them scaring the natives."

The administrators avoided making thousands of workers redundant yesterday after the Government gave £6.5m in emergency funding to pay salaries and other bills for a week.

The Department of Trade and Industry said it would decide whether to make further funds available at the end of the week depending on how talks with SAIC and other potential bidders were going.

Mr Lomas said it had received about half a dozen expressions of interest over the weekend from potential buyers, one of which came from John Moulton's Alchemy, the venture capital firm which made an abortive bid for Rover five years ago when it sold by BMW.

But he warned that none of them knew much about the assets and liabilities of MG Rover and none was offering to put up working capital to keep it alive during negotiations.

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