MG Rover on the Brink of Bankruptcy

In a statement released that afternoon, MG Rover called upon the government to supply a loan, to ease the debt that would

MG Rover called upon the government to supply a loan, to ease the debt that would otherwise be assumed by SAIC. (Photo: MG Rover)

otherwise be assumed by SAIC. Peter Beale, VP of Phoenix Venture Holdings said, "We requested the bridging loan from the government to provide the additional time needed to complete our partnership with SAIC. The PVH directors will provide 10 million pounds of personal money to convince the government of our commitment." He also added, "Speculation about the ability of MG Rover to survive will continue to mount as long as the decision on the loan is delayed. The speculation has affected the confidence of our suppliers and dealers and time is clearly running out."

Though Beale's promise was enough to secure a government pledge of a £100m loan, it wasn't enough to convince the Chinese to take on the dying marque. Top brass at SAIC are said to have considered the one-year term insufficient, believing that MG Rover would not

From bad to worse, after talks with SAIC ended, production at MG Rover's main plant in Longbridge was stopped. (Photo: MG Rover)

have been able to repay the loan in time, leaving SAIC to assume more debt. SAIC is also said to have wanted guarantees on MG Rover's solvency, and has serious concerns about the company's pension funds for its 6,100 employees and payments to its directors.

After talks between MG Rover and SAIC ended and the Chinese pulled out of the proposed buy-out, the bad news became worse: production at MG Rover's main plant in Longbridge was stopped. Production halts are unusual but not unheard of in the automotive industry; for example, Jaguar has paused production of its X-Type on occasion due to slow sales, but it's a completely different case with MG-Rover.