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Rover rescue in the wings
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June 22, 1999: 11:30 a.m. ET
BMW and U.K. seen set to unveil aid package for carmaker's U.K. Rover unit
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LONDON (CNNfn) - German carmaker BMW and U.K. government officials are poised to unveil a deal Wednesday under which the British government will pump up to $238 million in state aid into the company's ailing Rover plant in return for pledges by BMW to produce a new medium-sized car at the plant that could save up to 50,000 jobs.
Britain's Trade and Industry Secretary, Stephen Byers and BMW chairman Joachim Milberg are expected to announce Wednesday the details of a 2.3 billion pound ($3.65 billion) investment scheme by BMW aimed at turning around the loss-making Rover plant at Longbridge, in central England.
Neither BMW nor British authorities would confirm the deal Tuesday, other than to acknowledge that they were preparing for a news conference in London Wednesday at which they will provide further information about the Rover talks.
But a union source told Reuters BMW would roll out details to produce a new mass-market car at Rover's Longbridge plant to succeed the company's 200 and 400 medium-sized models.
The program will reportedly safeguard about 9,500 jobs at Longbridge and up to 50,000 jobs in the central English region known as the West Midlands.
In return for its commitment to Longbridge, BMW has sought to secure a British aid package of 150 million pounds ($238.77 million). London's Times newspaper reported that BMW's investment in the Rover plant could total 2.3 billion pounds.
Any agreement would require the approval of European Union officials.
The aid package is aimed at shoring up a subsidiary whose poor performance has earned it the sobriquet "The English Patient" in the German press.
The Rover 200 and Rover 400 models contributed more than half of BMW's vehicle sales last year and those models, along with the successor car, are seen as vital components in BMW's business strategy.
In 1998, BMW's net profit fell to 903 million marks ($478 million) from 1.246 billion marks a year earlier due to meteoric losses at Rover, which posted losses of 1.871 billion marks.
--from staff and wire reports
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