Secret talks spark hope at Rover
1 May 2000
According to a copyrighted story in today's THE TIMES (London), it seems that BMW ENTERED into secret negotiations with the rival bidder for Rover last week even before the Alchemy deal fell through. BMW handed over all Rover's financial details to the Phoenix consortium led by John Towers, the former chief executive of Rover, towards the end of last week, fuelling hope in the Phoenix camp that its bid could succeed. Yesterday the Department of Trade and Industry said Mr Towers had said that he now had all the details he needed - implying that they had been delivered since Alchemy pulled out on Friday. This implies that BMW is willing to strike a deal to save Rover with a bid that will ensure volume car production. A source close to the Phoenix bid said: "The figures were all given last week, which made everyone more optimistic that BMW were serious about Phoenix. But it was done quietly, and before the Alchemy announcement, so we didn't want to raise too many hopes." The fact that Mr Towers has had the figures for several days will mean that negotiations, which start tomorrow, will be able to proceed more speedily and with each party briefed on the other's position. It is thought that it will be clear to them this week or next whether they will sign the deal to save Longbridge. Stephen Byers, the Trade and Industry Secretary, came under sustained pressure from union bosses and businessmen yesterday to promise financial support for Phoenix.DTI officials are holding private talks with the unions to work out a possible package of support for the consortium. Both Downing Street and DTI officials made clear publicly that Mr Towers had not asked for any government subsidy. But they did not rule out the prospect of direct intervention within the confines of European Union competition rules, which are designed to curb unfair state subsidies. However, the demands for fresh government intervention could prompt new strains between Mr Byers and some of his officials. In particular, some senior officials at the DTI are reported to have opposed Mr Byers's recent decision to give the mining industry Pounds 100million. John Monks, General Secretary of the TUC, led calls for Government intervention, denying that Phoenix was a "basket case" and insisting it had a "fighting chance". He told GMTV's Sunday Programme: "The Government were prepared to give money to BMW for the development of Longbridge and I think they should be prepared to give some money to the Phoenix bid, too." Bill Morris, General Secretary of the Transport and General Workers' Union, urged the Government to match the Pounds 152million that had been offered to BMW. He said: "Whoever is the new buyer, we believe that the case is well established for the Pounds 152million of state aid." Grants will be available for retraining and development, although any awards may face difficulties with the European Commission if the assistance is not properly justified. The Pounds 152 million - which was never paid - was subject to a European Commission inquiry. John Caudwell, the millionaire owner of Caudwell Communications, urged the Government to spend part of its Pounds 22 billion windfall from the auction of mobile phone licences last week to save Rover. As BMW handed over its books to Phoenix, it denied reports that it was planning to pull out of manufacturing the new Mini at Rover's Cowley factory near Oxford. It is believed that the banks backing Phoenix include two high street names. Their commitment will depend on the figures that BMW produces. Times story was written By Christine Buckley and James Landale