Hopes rise that Rover Cars may yet be saved

Talks between BMW and Phoenix, the Midlands-based business consortium, over the purchase of Rover Cars in Britain opened in London yesterday with positive indications emerging that the Longbridge car plant could be saved from closure.

After a day of talks with representatives of the German carmaker, the head of the Phoenix group, Rover's former chief executive, Mr John Towers, said negotiations were "going in the right direction" and he was "extremely positive" about reaching a deal with BMW. With British Government officials working behind the scenes to ensure Phoenix is given every opportunity to put together its bid in the light of BMW's declaration that the plant will be closed at the end of the month if it cannot find a buyer, Mr Towers sounded an upbeat note.

The talks with BMW were "very detailed and positive" and both sides had identified the few remaining items ahead of securing the future of the Longbridge plant. Among those items will be the question of who will pay for the redundancy package at the plant which could still scupper any deal but both sides will spend the rest of the week ironing a viable future for Rover. The talks came as BMW's favoured bidder for the car plant, the venture based capitalists, Alchemy Partners, said it had been in "gentle contact" with the German carmaker over the weekend. Last week BMW broke off negotiations with Alchemy Partners but the group's head, Mr Jon Moulton, said yesterday that it had left the door open to resume negotiations with BMW. Insisting there was "no economic logic" to the Phoenix bid, Mr Moulton said Alchemy remained the best option for Rover. "It is the best because it is the only viable route," he told BBC Radio 4. "I would love to think that the Phoenix bid would protect a lot of jobs for a long time, but I don't."

At Longbridge, Rover workers offered their financial support for the Phoenix bid. Several employees at the plant approached union officials saying they were prepared to put money into the Phoenix consortium in order to secure the take over of the car plant. A delegation of Longbridge workers will travel to London later today to urge the British Prime Minister, Mr Tony Blair, to support the Phoenix bid.

If BMW does not agree terms with Phoenix or Alchemy Partners and the plant closes, it is believed that about 9,000 jobs will be lost at Longbridge and as many as 30,000 more among its suppliers, mainly based in the West Midlands. The Prime Minister has pledged to "work night and day" to secure the best interests of the Longbridge workers and the West Midlands. But Mr Blair's official spokesman stressed that the Government could only work within the context of a commercial discussion and could not "wave a magic wand" to secure a deal.

A spokesman for Mr Blair also pointed out that any state subsidy must meet the conditions laid down by the EU to prevent unfair competition.

British officials in Brussels last night said they expected the European Commission to block any aid application.

BMW has denied a German newspaper report that its chief executive, Professor Joachim Milberg, faces the sack for his mishandling of the sale of Rover Cars. The company described as "absolute nonsense" the suggestion that Prof Milberg would be replaced by the end of July.

Prof Milberg was away from his desk yesterday due to illness. Speculation about a possible successor is focusing on Mr Wendelin Wiedeking, the chairman of Porsche. But no such decision is likely to be taken until BMW has successfully rid itself of Rover, which is costing it more than £2 million a day.