NOT AN INDUSTRY FOR DEVELOPED NATIONS:

Confidential report raises fresh doubts over MG Rover solvency (Ingrid Mansell, 4/04/05, Times of London)

THE Shangai Automotive Industry Corporation (SAIC) has received a confidential report by Ernst & Young which suggested that MG Rover’s parent company would be insolvent by March 31.

The accounting firm’s conclusion has raised fresh doubts over the Chinese giant’s plans to rescue Britain’s last remaining major carmaker.

It is understood that the continued solvency of Phoenix Venture Holdings, MG Rover’s ultimate owner, is a key condition of SAIC’s £200 million bail-out proposal.

SAIC commissioned Ernst & Young to run a due-diligence analysis of Phoenix. The report, which was handed to SAIC last month, found that Phoenix was rapidly running out of cash and would no longer be solvent as of March 31.

A source said: “The report also found that Phoenix had no ability to remain solvent for a sustainable period thereafter.”