Britain's Phoenix consortium was reported to have given access from BMW to its ailing British car maker Rover subsidiary’s financial details Wednesday, an indication that a deal will be reached soon between BMW and the consortium, Reuters reported on Thursday.
It added that there were strong signs that BMW AG would be willing to sell off its loss-making unit to the group rather than shut it down, but little time and financial backing as well as potentially huge redundancy payments may still thwart Phoenix' attempt to draw up a strategy sound enough to secure Rover's future.
"This isn't simply about whether they have the money to buy it. It's about whether they can afford to keep it going, about whether their business plan is robust enough to turn Rover around," one source close to the talks told Reuters.
"Before Phoenix can get the finance, it has to produce a business plan. It will know whether it can or can't make it work by the end of the week, certainly by Monday," the source said.
However, AFP reported the same day that Negotiations between BMW and the British consortium Phoenix for the sale of Rover have achieved no breakthrough, quoting a spokesman for the German car maker.
"Phoenix must first put forward a sufficient proposal to finance its bid," AFP reported the spokesman had said, adding that negotiations would only be successful "if it is clear that Phoenix has the financial strength to operate Rover on a long-term basis."
The head of the Phoenix consortium, John Towers, on his part, had expressed optimism to the outcome of his talks with the German car maker.
The Phoenix consortium is led by Towers, former Rover chief executive, and groups UK car bodies firm Mayflower , a Rover dealer and British racing car group.
"[the talks on Tuesday had been] very detailed and positive. We've been through a heck of a lot of very detailed stuff and it's also been extremely positive," Towers had told journalists outside BMW's lawyers office in London.
"What we've done is we've managed to identify the few remaining items that our teams are going to have to work on for the rest of this week, and it's all going in the right direction," he said.
Phoenix has emerged as the last hope for Rover, after London investment firm Alchemy Partners unexpectedly pulled out of talks to buy the carmaker last Friday, even though it had dismissed Phoenix’s offer prior to that; a turnaround that had caused substantial embarrassment to the German car maker.
But Phoenix has not yet proven it has the financial ability to keep Rover alive. Phoenix does not seem to have the money to pay for Rover's liabilities and to ensure the company can survive in a competitive European car market -- especially in Britain where pressure for car price cuts is building up.
Reuters said BMW is willing to pay a bidder -- about 500 million pounds ($781.3 million), some industry source say -- to acquire Rover Cars and thus salvage its own reputation in Britain. It added that the company has said it will close its ailing unit if that is the cheaper option.
Rover Chief Executive and BMW management board member Werner Saemann seemed to warm further to Phoenix on Wednesday, saying in an interview with the Birmingham Post that BMW would let the group take over Rover's newest Rover 75 model -- an offer that had not been on the cards for previous bidders, Alchemy.
Alchemy had planned to more than halve Rover ouput and to shed thousands of jobs at Rover's 9,000-strong Longbridge plant and among scores of Rover suppliers in central England's West Midlands.
Reuters quoted industry experts as saying Rover -- which is losing $3 million a day -- needs at least $1 billion to sustain its plans to keep output at some 220,000 cars per year and save thousands of jobs that would have been cut under Alchemy – (Agencies)
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