LONDON: British Prime Minister Tony Blair was rushing to emergency talks yesterday on the future of century-old auto-maker MG Rover, which earlier began bankruptcy procedures following the collapse of a proposed tie-up with a Chinese partner, threatening thousands of job losses ahead of elections.

Back from Pope John Paul II’s funeral at the Vatican, Blair was travelling with his Finance Minister Brown to Birmingham, central England, for talks “relating to the situation at (Rover’s) Longbridge” plant, the prime minister’s office said.

It was also revealed that Blair spent 25 minutes talking to China’s Prime Minister Wen Jiabao last Wednesday in a last-ditch bid to rescue Rover’s proposed partnership with the Shanghai Automotive Industry Corp (SAIC).

The owners of MG Rover appointed administrators yesterday after the collapse of a proposed joint-venture deal with SAIC, amid British government moves to safeguard 6,100 Rover jobs and thousands more dependent on the plant’s production.

Rover’s “directors are taking the necessary steps to appoint administrators”, said Phoenix Venture Holdings, the owners of MG Rover, in a statement.

“Following the completion of these formalities, the administrators will issue a statement and press release later today. All employees are asked to come to work normally on Monday.”

Rover officials and trade union leaders met administrators from accountancy firm PricewaterhouseCoopers (PwC) earlier yesterday in a bid to salvage motor manufacturing at Longbridge.

The future of MG Rover, the last major British independent auto-maker, was thrown into jeopardy after the collapse of the deal late Thursday.

That, alongside Rover’s slide into administration, threatened an estimated 18,000 jobs at component suppliers.

Blair’s government, seeking to win a third consecutive term in polls on May 5, pledged yesterday an emergency rescue package of £40mn ($74.7mn) to help suppliers.

Rover’s failed deal with SAIC was a body blow for Blair, whose government is fighting next month’s election largely on its economic record, and the loss of thousands of jobs in key constituencies in central England could prove hugely damaging.

Administration is designed to protect companies from their creditors while a restructuring plan is completed to decide whether a company can be saved.

“We will now do everything possible, government and unions... to try and save jobs and secure a future for manufacturing here at Longbridge,” Trade and Industry Secretary Patricia Hewitt said.

Her government had offered a £100mn bridging loan to help Rover stay afloat until a deal with SAIC had been struck.

But she said that “once there was no prospect of a deal, there was no possibility of a bridging loan”.

SAIC pulled out of the deal owing to the perilous financial health of Rover’s owner, China’s official Xinhua news agency said, citing officials close to the deal.

The group was also concerned about expected European Union regulatory scrutiny over loans, subsidies and tax breaks that the British government was proposing to push the deal through, the report said.

“Rover’s financial situation was worse than the British government and SAIC had previously thought,” a person with knowledge of the deal was quoted as saying by Xinhua.

Workers arriving at Longbridge yesterday said they had believed a deal with the Chinese firm was about to be signed.

Assembly worker Donald Davies, 61, who has worked there for 15 years, said he was shocked to hear the news.

“We thought the Chinese deal was going ahead but it’s collapsed. I think they will be telling us we won’t be returning to work.”

Rover, which produced its first car in 1904, was bought by BMW 90 years later, before the German car-maker offloaded the group in 2000.

The group was saved from closure by local businessmen, including its then-chief executive John Towers, who purchased the company for the nominal sum of 10 pounds. The company became known as MG Rover, incorporating Rover’s popular MG sports car brand.

Britain’s auto industry was already reeling from a decision by US giant Ford Motor Company last September to halt production of luxury Jaguar vehicles at its plant in Coventry, central England, leading to the loss of 1,100 jobs. – AFP