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The British Government struggled to resurrect an alliance between MG Rover, the last major British-owned carmaker, and a Chinese partner as the deal’s failure threatened thousands of jobs and loomed large over campaigning ahead of the country’s general elections next month.
British Prime Minister Tony Blair rushed straight to MG Rover’s Longbridge factory in Britain’s second city Birmingham on Friday and pledged to try to patch up the deal.
The owners of MG Rover announced Friday they had appointed administrators to handle its affairs following the collapse of a proposed joint-venture deal with Shanghai Automotive Industry Corp. (SAIC).
The tie-up would have seen SAIC pump millions of dollars into the ailing British automaker, which employs 6,100 workers but also ensures jobs for thousands in related supply industries.
The future of MG Rover, the last remnant of a once-mighty group of British car firms which produced its first car in 1904, was thrown into jeopardy after the collapse of the Chinese deal late Thursday.
SAIC said it had put significant time, effort and resources into discussing the partnership, but considered it “imprudent to enter into a transaction in which the insolvency risks of its joint venture partner could have transferred significant financial liabilities on to the proposed U.K. joint venture.”
“In spite of the possibility of the British Government making available short-term bridging finances, SAIC’s fundamental concerns relating to the ongoing financial state of MG Rover were not resolved,” SAIC said.
SAIC’s acquisition of MG Rover would have required approval from the Shanghai city government, SAIC’s controlling shareholder, and the National Development and Reform Commission, an agency in charge of economic policy in China.
(Shenzhen Daily April 11, 2005)
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