The UK government announced on Sunday that it has offered a ?6.5 million loan to troubled carmaker MG Rover to keep it afloat while it tries to revive a crucial deal with a Chinese firm.

MG Rover filed for a form of bankruptcy protection on Friday after the Shanghai Automotive Industry Company (SAIC) pulled out of talks on a takeover of the last major UK-owned car manufacturer.

UK Trade and Industry Secretary Patricia Hewitt said the funds had been agreed to avoid job losses "while efforts are made to keep the business together."

"The government has agreed to assist and work with the administrator and trade unions, who will be developing, with all reasonable speed, a realistic business proposition for SAIC and other potential purchasers to consider,” she said, “We will monitor the situation closely and review the adequacy of funds available while there is a realistic prospect of reengagement with SAIC."

She said the loan would pay wages and expenses for a week while officials try to persuade SAIC to reconsider.

Six thousand jobs are at risk if the company's main Longbridge plant in Birmingham closes down.

Administrators, government officials, company managers and union leaders spent the weekend in crisis talks in an attempt to revive the proposed partnership between MG Rover and SAIC.

(CRI April 12, 2005)