Govt mulls loan for Rover-SAIC

Govt mulls loan for Rover-SAIC

Reuters, London

The British government is considering a bridging loan to support a possible deal between the UK carmaker MG Rover and China's Shanghai Automotive Industry Corp (SAIC), a trade department spokeswomen said on Saturday.

The two firms are in talks to create a joint venture that would give SAIC a foothold in Europe and rejuvenate the model range of Rover, which has been struggling to break even since it was sold four years ago by Germany's BMW AG.

A Department of Trade and Industry spokeswoman said government officials were in China this weekend holding talks with SAIC and the Chinese government.

"If it appears that a commercial deal will be agreed both MG Rover and SAIC are aware that the govt would consider the option of providing a bridging loan facility to that deal," she said.

"No final decision has been made. If it were to be offered, any potential bridging loan facility would be provided under strict criteria to ensure the proper use of taxpayers' money and would be fully repayable."

She gave no indication of the size of the loan.

The government said on Saturday it was considering a package of support and financial assistance to workers who would be affected if the deal did not go ahead.

Unions at MG Rover's Longbridge Plant in central England say they are concerned about the fate of around 6,000 jobs.

British finance minister Gordon Brown held talks with Chinese officials in Beijing in February to lobby for the venture.