Jobs at risk as Rover collapses in Britain

LONDON - Britain's last major carmaker MG Rover has collapsed, putting 6000 jobs at risk after it failed to secure an alliance with a potential Chinese partner, the government says.

The 100-year-old carmaker has gone into receivership, a form of bankruptcy protection under which a court-appointed third party takes control of the business, the Trade and Industry Secretary Patricia Hewitt told a news conference late on Thursday.

"MG Rover has announced that their board has decided to call in the receivers. This is a devastating blow to everybody involved -- the workers and their families, the company's suppliers and the wider community," Hewitt said.

The move came after China's Shanghai Automotive Industry Corp. (SAIC) said it would not invest in the company.

"In the end, SAIC made it clear that they were not confident about the future solvency of MG Rover, and therefore there was no reasonable prospect of a deal," she said.

The collapse could impact 6000 staff and thousands more supply jobs, creating a political headache for the British government in the run-up to a general election on May 5.

Hewitt said the government could not give MG Rover a 100 million pound loan without the prospect of a deal with the Chinese automaker.

"This is an issue between the government and MG Rover," an SAIC spokesman said.

"We have said a deal would not be possible until Phoenix Venture Holdings (Rover's holding company) were able to secure the solvency of MG Rover for the period of 2 years and that hasn't been met," the spokesman said.

MG Rover was forced to stop production on Thursday as suppliers suspended deliveries over fears they would not be paid.

"This is a deeply worrying time for everyone," an MG Rover spokesman told Reuters. "We have asked PricewaterhouseCoopers to accept engagement to advise the board of directors on the current position of the company."

MG Rover, a former icon dating back to 1905, was sold to Germany's BMW in the 1990s before returning to British hands when it was sold to Phoenix four years ago.

The collapse of MG Rover is a severe blow to Britain's carmaking industry.

Ford, which owns the luxury brand Jaguar, cut jobs and scaled back production last year.

- REUTERS