Phoenix approaches GM in search for Rover bid finance

The Phoenix consortium is believed to have approached General Motors, the owner of Vauxhall, in an attempt to raise money to fund its rescue bid for Rover.

The approach is thought to have been made to GM's finance arm, which is separate from the group's main car-making operations.

Phoenix, which is led by the former Rover chief executive John Towers, is thought to need at least £700m in finance to make its bid viable and proceed with plans to maintain volume car production at the Longbridge plant.

Burdale Financial, the UK arm of First Union Bank of North Carolina, yesterday confirmed it had offered Phoenix £200m of working capital to help fund its bid. The offer is conditional on due diligence and legal conditions being met. Phoenix will have to pay interest at 2 per cent above inter-bank lending rates.

But the consortium is thought to need an additional £500m to finance the Rover dealer network and cover buyback guarantees on lease-financed cars.

Mr Towers and BMW executives spent another day yesterday locked in talks at the offices of the German car maker's London solicitors, Norton Rose. An announcement about whether BMW will accept the Phoenix bid could come as early as today or tomorrow.

Amid indications that BMW was looking more favourably on the Phoenix bid, a spokesman for the consortium said: "Clearly the fact that negotiations are continuing to take place is a positive rather than a negative sign." Analysts remain sceptical, however, about whether the Phoenix plan is viable given Rover's losses, currently running at £2m a day.

BMW has to satisfy itself that the Phoenix proposal can guarantee Rover's future for at least two years. If it were to close within that period, BMW's potential liability could be £2bn.