BMW and the Phoenix consortium have started to negotiate the possible sale of Rover, the Munich carmaker's troubled UK subsidiary. Former Rover chief John Towers said on Tuesday that an initial round of talks with BMW had been encouraging.
A number of key issues remained to be discussed, Towers said in an interview. Earlier one of his partners, businessman John Hemmings, had told Sky TV that the Phoenix bid would not need government backing to save Rover's main production site Longbridge from closure. An estimated £700m is thought to be required to get the UK car maker back on its feet.
Britain's trade and industry secretary, Stephen Byers, has thrown his weight behind the Phoenix initiative. However Byers did emphasise on Tuesday that Phoenix' ability to demonstrate a credible financing structure was crucial at this stage. In terms of giving aid to the bid, the British government is likely to find its hands tied by European competition law. As the Financial Times reported on Wednesday, British advisers in Brussels have warned that the European Commission would block any aid application.
Another concern for Phoenix came when Alchemy Partners, which had unexpectedly walked away from negotiations with BMW last Friday, said it had drawn up a revised bid for Rover. Jon Moulton, Alchemy's managing partner, said the company had left a door open to resume talks. BMW said it was not interested in such a move.
Meanwhile BMW's management found its own problems intensifying. Members of the advisory board as well as shareholders denied claims that Joachim Milberg, the group's chairman, was to be given the sack over the disastrous engagement with Rover.