Rover may seek more bailout cash

13 April 2012

FAILED carmaker MG Rover could ask the Government for further loans following this week's £6.5m bailout. Administrators PricewaterhouseCoopers said today that they could ask the Government to extend the loan provided it can be shown there is a sound business logic for doing so.

Likely grounds for an extension would include proving that there are substantive talks with potential buyers or rescuers of all or parts of the business.

However, fears over a rescue have been raised by the administrators' admission that Rover's pension liabilities could be as high as £400m. That is much more than the deficit shown in the company's last accounts, for 2003, which was only £67m.

The four directors of Phoenix, the company led by John Towers that took over Rover five years ago, have offered assets worth £49m to the administrators to help keep Rover afloat while a rescuer is sought.

SPECIAL REPORT: Read our full round-up of the collapse of MG Rover

These include stakes in 10 Rover dealerships and Studley Castle, which is a conference centre. They are understood to be owned by Phoenix Ventures separately from MG Rover.

However, little of this is in cash, which is what the administrators need to keep Rover's 6,100 workforce employed once the Government's £6.5m loan runs out next week. PwC has asked Phoenix to provide more details on the assets and any charges that could be held against them.

MG Rover is believed to owe between £200m and £300m to suppliers, about £25m to dealerships and would have to pay around £300m in redundancies.

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