Time running out for MG Rover

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Car giant MG Rover today warned that time was "clearly running out" on reaching a deal with its proposed Chinese partner as production remained suspended at its factory.

The firm issued a plea to the Government to "make a decision" on a bridging loan to help complete negotiations with the Shanghai Automotive Industry Corporation (SAIC).

The company also said that its directors will provide £10 million of their own money to convince the Government of their commitment.

The Department of Trade and Industry said the loan was available, provided there was still a deal to be done.

MG Rover said in a statement: "Today MG Rover called on the Government to make a decision on the bridging loan which will open the way to the car maker completing complex negotiations with the Chinese company SAIC. The loan is crucial if the partnership is to be established."

MG Rover said the suspension of production was temporary and it remained optimistic that the Longbridge plant would return to normal.

But it seemed that local suppliers would not resume deliveries of parts until the crisis was resolved.

One West Midlands based firm which suspended supplies to MG Rover revealed it was owed almost £1 million.

Wagon, which makes door frames for the Longbridge plant, said in a statement: "The board of Wagon announces that, in view of MG Rover's current inability to meet its payment obligations, it has decided to suspend supplies to MG Rover with immediate effect. Wagon currently has approximately £0.9m of receivables outstanding with MG Rover."

Wagon, which employs 1,000 workers in the UK, said it will restructure parts of its operation if supplies to MG Rover are terminated permanently.
The cost of any restructuring would be around £1.5 million.

A spokesman for Trade and Industry Secretary Patricia Hewitt said later: "The bridging loan is available provided there is still a deal to be done."

 

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