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Out of Time?

527 Views 3 Replies 3 Participants Last post by  JohnSwitzer
From BBC News This Morning - think of it what you will.

PS. Not posted this in the new merged thread - this is to do with MGR and not directly the Chinese deal.

MG Rover denies insolvency claims

MG Rover has denied reports that it could run out of cash as soon as Friday, as it tries to clinch a last-ditch deal to secure its future.

The Independent said Rover would be forced to call in receivers by Friday unless it receives an emergency £100m bridging loan from the government.

Rover employs 6,000 staff at its Longbridge plant in the West Midlands.

Government officials are in China for talks with Shanghai Automotive Industry Corp on a £1bn investment in MG Rover.

The Financial Times said discussions had so far proved inconclusive.

'Only hope'

Over the weekend, the UK Government said it was ready to offer MG Rover a bridging loan - widely reported to be worth £100m - to keep it afloat long enough to clinch investment from China.

Clearly the discussions going on in Shanghai are very important and we will wait for the outcome
MG Rover spokesman

UK Trade Secretary Patricia Hewitt has said that talks between Birmingham-based MG Rover and China's biggest car maker were the "only hope" for the UK firm.

However, Shanghai executives are reported to be concerned about Rover's viability amid reports of its worsening financial situation.

The Independent said the last British-owned volume car maker - which employs 6,000 staff at its Longbridge plant - was on the brink of insolvency.

The Financial Times reported that the company would run out of money within the next month.

Rover said it would not comment specifically on its own financial position but it denied that receivers would be appointed on Friday if the bridging loan was not secured.

"Clearly the discussions going on in Shanghai are very important and we will wait for the outcome," said a Rover spokesman.

'Pension hole'

Meanwhile, Rover has denied a report in Sunday's Observer newspaper that it has a £400m hole in its pension fund which is jeopardising the deal. A spokesman for the company said the figure was "completely misleading".

The firm had acknowledged a pensions shortfall of £67m in its 2003 accounts published last October, he said.

The Observer reported that an outline deal with SAIC had been ready for weeks but had not been signed because the Chinese firm feared MG Rover could soon go bust, leaving it to shoulder pensions liabilities.

The paper quoted an adviser to SAIC as saying a new loan "may give everyone more time to negotiate the deal" but "if, as seems likely, Rover is close to insolvency, it does not mean the deal will be done."

The Rover Select
Rover has struggled to make an impact in a competitive market

SAIC representatives in London declined to comment.

Industry experts said a deal was still a possibility but warned that time was fast running out.

"Clearly there is a cash flow problem here," Garel Rhys, director of the Centre for Automotive Research at Cardiff Business School, told the BBC.

"[MG Rover] has not got a great deal of funds over the next six months and I think that is the issue for the Chinese. They want to make sure the company does have funds for the immediate future."

Election pressures

MG Rover employs about 6,000 workers at its Longbridge plant in Birmingham, and dozens of West Midlands engineering firms depend, at least partly, on supplying MG Rover, Britain's last surviving mass car maker.

Birmingham could be an important battleground in the forthcoming general election as it has several marginal seats.

Under the proposed deal, the Chinese firm would inject cash into MG Rover to help it develop new models; in return it would secure rights to Rover's more advanced technology.
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This is all still related to the SAIC deal and should have been placed in the merged thread.
QUOTE=EssexMGR]This is all still related to the SAIC deal and should have been placed in the merged thread.[/QUOTE]

Id say its more about MGR running out of cash by Friday. But put it where you like.

The thing is, usually there is no smoke without fire with these sort of headlines. Rumour stories in the press are one thing but to actually put a story claiming insolvency is another level. It’s the sort of thing a paper could be heavily sued for if there is no substance. I hope some sort of package is arranged by Friday.
It’s the sort of thing a paper could be heavily sued for if there is no substance.

Yup, but who is going to risk the wrath of the media by suing a newspaper. Only a complete idiot.

For what it is worth, most of these stories are complete and utter nonsese and are either eminating from HM Government or the Great British Media who have their own selfish and nefarious interests at heart.

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