Rover in foreign sale talks

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The Independent Online

The 5,500 sacked MG Rover workers have been given a glimmer of hope by administrators for the stricken car company who said they were in talks with two foreign groups about selling the business intact.

The 5,500 sacked MG Rover workers have been given a glimmer of hope by administrators for the stricken car company who said they were in talks with two foreign groups about selling the business intact.

It is likely that a buyer of the whole business would have to pay for workers' contractual redundancy packages, which could total more than £50m, unless the buyer re-employed the workers.

If MG Rover were broken up and sold piecemeal instead, their full contractual entitlement would not be met. The workers are currently entitled only to the statutory minimum of £280 for every year worked.

Tony Lomas, the joint administrator from PricewaterhouseCoopers, said it was possible that if the business were sold whole, car production could also continue at MG Rover's Longbridge plant.

"Whether they are interested in producing cars in Longbridge permanently or temporarily is one option before they relocate. But I do not want to raise the public's and employees' expectations," he said.

One of the two foreign groups was from Iran, Mr Lomas confirmed. That country's largest state-owned car company, Iran Khodro, is understood to be one of the parties involved.

In a sign of the growing importance of Iran in the global automotive industry, a British trade body, the Society of Motor Manufacturers and Traders, is running the UK's first stand at the Tehran International Automotive Fair next month to promote British companies.

Mr Lomas also said he was confident that MG Rover still owned most of its intellectual property rights and could offer these for sale. Shanghai Automotive Industry Corporation, the Chinese car maker which wanted to form a joint venture with MG Rover, has already paid £67m for its share of the intellectual property rights. SAIC has been claiming that this will prevent anyone else from producing MG or Rover cars.

Having taken advice from lawyers, Mr Lomas denied this was the case. "A very substantial amount of intellectual property remains at Longbridge," he said. "It's available for the buyer. SAIC has acquired limited rights."

SAIC is likely to contest this. It is interested in MG Rover's machinery but would only buy it if it did not become liable for workers' redundancy payments.

Officials from the Iranian group and its rival visited Longbridge last week to carry out initial due diligence. About 90 other bidders are interested in MG Rover's assets, including companies from Russia, China, South-east Asia and the Middle East, as well as from the UK.

The Iranian group and its rival are the only ones to have expressed an interest in buying MG Rover as a whole. Mr Lomas said this was PwC's preferred option as it would fetch a higher price than a break-up. An initial deal could be reached in the next couple of weeks.

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