LONDON -- Hope for continued car production at MG Rover was all but over on Friday as a source close to the situation told Reuters there were no realistic prospects for a sale of the bankrupt company, hours before a bid deadline.
Without the prospect of a going concern sale, the next best thing is a break-up and sale of assets, but MG Rover owns only machinery and no property at its flagship Longbridge car production site, raising fears for creditors which include MG Rover suppliers.
"Realistically there are little bits of the Longbridge car plant (that could be sold) but not an awful lot," the source said.
Other MG Rover assets for sale include Powertrain, which makes engines for Ford Motor Co's Land Rover. It also has brands such as MG and Riley and it could sell the blueprints to its ZR, ZT and ZS car range.
It has already sold the intellectual property of its mass production cars, the Rover 25 and Rover 75, to China's Shanghai Automotive Industry Corp.
The small size of prospective sale proceeds raises fears for creditors of the company, including suppliers such as BMW, a pension scheme and employees' benefits such as outstanding pay.
MG Rover is still making losses of about 3 million pounds ($5.57 million) a week despite mass layoffs four weeks ago, the source said.
These ongoing costs include continued wages for 500 employees, as well as rent, security for the plant, and transport costs for any prospective sales.
If asset sales raised less than these ongoing costs then creditors would get nothing.
MG Rover administrators PricewaterhouseCoopers declined to comment.
END OF THE LINE
Any buyer of the Longbridge plant would make losses on car production much below 500,000 vehicles a year, the source said.
The plant produced just 113,000 new car registrations in 2004, and both Phoenix Venture Holdings -- its last owners -- and MG Rover's previous owners, BMW, struggled to find buyers for the business.
"It is not a compelling business plan to build models which are long in the tooth, and (then) make big losses," he said.