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MG Rover 'losing £20-25m' every month

Administrators appointed to examine the accounts of MG Rover have revealed the extent of losses at the Midlands' car firm which collapsed on Thursday.

Joint administrators from accountants PricewaterhouseCoopers Ian Powell, Tony Lomas, Rob Hunt and Steven Pearson, revealed that MG Rover and the engine manufacturing business Powertrain is losing between £20m and £25m per month.

Yesterday PwC secured £6.5m funding from the Government to sustain the business and pay the workforce for a further week.

Powell, a partner at PricewaterhouseCoopers, says: "Since our appointment on Friday, we have worked with management, unions and the Government to assess the situation. We are pleased to have secured this funding which has given us vital breathing space to evaluate the interest of all parties. However, this funding must be viewed in context – it is a small step forward.”

The European Commission said it expected the Government to notify it about the emergency funding within the next 24 hours, adding that in theory no aid can be paid out if it has not been notified.

The administrators said there is a possibility that their appointment creates an opportunity to "resolve some of the concerns around the previous deal, and we now seek to engage in discussions with SAIC as soon as possible".

The majority of the workforce has been asked to go home on full pay. However, a number of employees have been asked to stay on site to assist the joint administrators. Car production had already ceased prior to the appointment of the administrators and there are no plans to resume car production, although it is expected that limited engine production will continue at Powertrain.

Staff at the Longbridge plant will attend a meeting addressed by union leaders to hear about the attempt to rescue the company and lift it out of administration.

The announcement of the funding came yesterday after talks between Trade and Industry Secretary Patricia Hewitt, trade unions and the administrators appointed to run the company following its collapse.

Hewitt said the Government had agreed to provide emergency funding "in order to avoid the issuing of redundancy notices at MG Rover while efforts are made to keep the business together."

MG Rover called in the administrators on Friday after the failure to secure an investment deal with the Chinese Shanghai Automotive Industry Corp.

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