Rover bosses set for cash windfall in £1bn Chinese takeover

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The Independent Online

The four businessmen who own MG Rover are in line for another multi-million-pound windfall when they hand control of Britain's last large-scale independent car manufacturer to a state-owned Chinese company in a £1bn deal.

The four businessmen who own MG Rover are in line for another multi-million-pound windfall when they hand control of Britain's last large-scale independent car manufacturer to a state-owned Chinese company in a £1bn deal.

The owners are close to signing a deal to safeguard loss-making MG Rover's immediate future as well as 6,000 jobs at its Longbridge plant. But a spokesman did not rule out the possibility that the four businessmen will receive money as part of the deal, which is expected to be signed in January or February.

Led by John Towers, MG Rover's current owners formed the Phoenix consortium to rescue the car maker from closure when they bought it from BMW for a token £10 in 2000. The "Phoenix four" have already set up their own £16m pension fund; they also granted themselves a £10m loan note from the company when they bought it.

A spokesman said: "You will see when the deal is announced that what the directors have done is logical." He did not give details, or explain what their roles in the new company would be.

A new holding company will be formed, with Shanghai Automotive Industry Corporation (SAIC) taking a 70 per cent stake. The new company will be responsible for all current car production, and will oversee the launch of four new cars vital for MG Rover's survival.

SAIC, which has already made an estimated £40m down-payment, will invest £1bn to launch the new models. These will include a replacement for the Rover 45 mid-size car, which will appear in 2006.

Under the plans, which have not been finalised, production at Longbridge will be increased to around 200,000 cars a year, with up to 800,000 Rover cars also being produced in China.

The spokesman insisted that the deal was not a takeover. "SAIC is an equal partner. This is a pooling of resources," he said.

Tony Murphy, national automotive officer for the manufacturing union Amicus, welcomed the news. "It's the only deal in town. Without it, we would be struggling," he said.

Last month, MG Rover announced losses of £77m for 2003 and warned that it would lose more this year.

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