Fresh blow to Rover as loan verdict looms

AILING carmaker MG Rover was dealt a fresh blow today as it was revealed sales of new Rover cars slumped more than 28% in March 2005

The figures from the Society of Motor Manufacturers and Traders are an unwelcome reminder of the car giant's condition, as it awaits a final decision from the Department of Trade and Industry on a crucial £100m bridging loan, which could be made today.

The funds are expected to help support an effective takeover of the last volume British carmaker by Shanghai Automotive Industry Corp (SAIC), whose executives are in last-ditch talks in China with DTI and Rover officials.

The DTI offered the funds at the weekend but only on the condition that the directors at Rover owner Phoenix Venture Holdings commit some of their own funds to help buttress a deal.

The condition now appears to have been met after Rover chairman John Towers, speaking from Shanghai, said he and his fellow directors were prepared to put some of their personal cash on the line.

'We have been providing every assistance, including extensive personal commitments, to enable [the DTI] to come to a decision,' Towers said.

{2}He and his team bought Rover from BMW for £10 in 2000. Since then it is estimated they have earned about £40m from the company in salaries and trust fund payments.

Rover and SAIC want to set up a joint venture to run the troubled British carmaker with 70% of the new ownership structure in the hands of the Chinese. DTI officials are making it a condition for their funding that the four Phoenix directors should invest 'several millions' in the deal. None of the directors, headed by chief executive Kevin Howe, have specified how much they will invest but reports of up to £10m have begun to circulate.