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Discussion Starter · #1 ·
Sorry to repost this but I want people to be clear and this is too important to lose in the big sticky thread above. The EU is NOT the obstacle to this deal. I'm not trying to score points for anyone. I just don't want the government to get off the hook on this one by blaming EU subsidy laws. The Guardian give an explanation see below:


Guardian City Pages
Labour may hold key to Rover's future: Joint venture agreement hangs on guarantee that pounds 100m loan will run for at least two years

Mark Milner, and David Gow in Brussels
650 words
7 April 2005

© Copyright 2005. The Guardian. All rights reserved.
The future of MG Rover and thousands of West Midlands jobs could hinge on how long the government is prepared to give the carmaker to repay a proposed pounds 100m loan.

Shanghai Automotive Industrial Corporation, MG Rover's potential joint venture partner, is understood to want the loan to be extended for at least two years.

It is believed to have argued that extending the loan for six months would not provide the reassurances it wants in regard to the financial position of MG Rover and its parent Phoenix Venture Holdings. However a two-year loan period would carry the joint venture to the point where it is expected to start making money.

Last week DTI officials flew to Shanghai to try to broker a solution. The government proposed a pounds 100m loan to tide over MG Rover in an attempt to keep the joint venture alive.

The looming election has increased the political pressure on the government because MG Rover's Longbridge plant is close to several marginal constituencies.

That was underlined at prime minister's question time yesterday when Richard Burden, Labour MP for Birmingham Northfield, sought assurances that the government would stand by the plant's 6,100-strong workforce.

Tony Blair replied: "We will do whatever we can to help get a successful resolution . . .What must be foremost in our minds are the jobs and living standards and livelihoods of those people who work at MG Rover."

Under the terms of the proposed joint venture, in which SAIC would have a 75% stake, the two companies would work together to develop new models with the Chinese automotive maker's cash and MG Rover's expertise.

But SAIC has been concerned that if the UK group were to become insolvent it would be faced with substantial liabilities in relation to the MG Rover's pension and redundancy funds.

Last night EU sources indi cated that competition authorities in Brussels would give swift approval to the government's proposed loan as "rescue aid", provided it was extended on commercial terms and MG Rover had not received similar help in the last 10 years.

The government has so far failed to notify Neelie Kroes, competition commissioner, of the loan which cannot be handed over until the EU has given the go-ahead. But preliminary talks with the DTI have been held.

"There would not necessarily be a veto from us and we would try to give a signal very quickly," the EU sources added.

Rescue aid is limited to six months but the EU rules would allow a loan over a longer period provided it was treated as part of a restructuring programme. "Two years would not necessarily be a problem but the restructuring aid has to be spent on restoring the company to commercial viability via job creation or reduction, taking out capacity or making new models - not keeping it artificially afloat," sources said.

Latest figures from the UK car market yesterday showed MG Rover is enjoying mixed fortunes. British sales of its Rover models fell by a third in the first three months of this year to just over 10,500. However sales of MG models were up 10% to 9,540 - bucking the market trend which saw overall sales down by more than 7%.

MG Rover said it was pleased with the figures. "Despite the current media spotlight we have maintained our market share in the first three months of the year at 2.9%."


Whatever your view of the EU do not let the slimy politicians in this country get of the hook!!!!!!!!!!!!!!!!!!! There is a general election. Tell the b*stard* what's what and tell them you understand EU subsidy law!

Sorry for the emotion, but feeling pretty emotional at the mo....

4,625 Posts
I'm afraid you are behind in the news...the loan is not the issue. It's the lack of an agreement and that looks like the end of May now...

6,361 Posts
Maybe the Guardians' brinkmanship has failed?

Gow wanted the government to take over last year as soon as he saw the effect on sales of the artificially-generated pensions fiasco. But the government haven't moved fast enough.

Or maybe MGR are playnig a game of brinkmanship? Maybe they don't actually WANT the money (in spite of what they say in public).

I'm pretty sure I'm behind the news now - it's changing almost hourly (!), but you ask yourself which came first? The lack of agreement or the lack of financial backing to cover the two years?

Couldn't the governemnt suggest a double loan (1 year plus 1 year or something) to cover the time? The first loan being definate, the second to cover the first? Would that be enough, or are SAIC having cold feet?
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