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MG Rover signs on £73m credit line

By Tim Burt, Motor Industry Correspondent
Published: April 14 2002 17:46 | Last Updated: April 14 2002 18:03

MG Rover, the independent British carmaker, has signed new credit lines worth £73m ($105m) after months of talks with its banks.

The financing deal, covering internal fleet cars, demonstrator models and vehicles for employee sales, has coincided with a meeting between MG management and its auditors over last year's financial results.

Maiden full-year figures from MG Rover, jettisoned by *** in March 2000, are expected to show that the carmaker cut its losses to between £160m and £170m last year.

Obtaining the further lines of credit means the group's "independence strategy remains in place," said one analyst.

Full-year results showing losses below £170m for 2001 would represent a sharp improvement on the £254m deficit reported for 2000, covering only the eight-month period after the break-up of Rover Group by ***. The German carmaker sold the former Rover cars business to a consortium of West Midlands businessmen for a nominal £10, while its Land Rover arm was acquired by Ford for E2.9bn (£1.78bn).

The management at MG Rover - led by Kevin Howe, managing director - believes the carmaker can survive as an independent. It has signed a strategic alliance with China Brilliance to develop new models and share sourcing, and cut its losses by withdrawing from unprofitable overseas markets and reducing its exposure to the low-margin daily rental and leasing market.

That business model helped persuade lenders at HBOS and First National Motor Finances, part of Abbey National group, to sign the new financing schemes.
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