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First rescue payouts paid to Rover suppliers

PricewaterhouseCoopers has made its first payouts to suppliers on behalf of MG Rover.

So far, £63,000 has been paid to six companies, saving 234 workers from losing their jobs.

Suppliers who rely on MG Rover for 15% or more of their total business are eligible for help from the Government, who will provide a total of £40m of support.

Jobs have been saved for the time being at the six firms, but another - Stadco in Coventry, which makes body panels for Rover - has said it may have to lay off 230 staff.

John Edwards, a member of the task force and chief executive of Advantage West Midlands, said that helping companies heavily dependent on Rover for most of their work could be more difficult than helping those that are more diversified.

"We have to target those companies, which with some support, can survive," he told BBC Radio 4's Today programme.

"We know of others where 85% of their business is supplying Rover. In these circumstances, it is hard for them to see a future for themselves.

"We are talking to the Government about deferring VAT and National Insurance payment, but it is very difficult."

Paul Melville, partner within Grant Thornton Recovery & Reorganisation, says: 'Many companies will need help in dealing with the immediate cash flow problems this loss of business will cause.

"Unless the supply chain is stabilised, other manufacturers and suppliers will be affected. We predict that a number of suppliers will have to seek protection from their creditors by using either administration or company voluntary arrangements.

"The question in the medium term is whether this will lead to manufacturers moving away from using local suppliers due to their financial insecurity and accelerate the trend towards resourcing in low cost economies in the Far East and Eastern Europe.' Source: bbc.co.uk

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