MG Rover, the ailing British carmaker, has signed a binding agreement to hand over technology and know-how to the Shanghai Automotive Industry Corporation (SAIC). The company's owners have also agreed to deliver intellectual property owned and used by the Powertrain engines business to the Chinese as part of a wide-ranging collaboration.
The deal with SAIC is still awaiting formal approval by the Chinese authorities but filings at Companies House reveal that MG Rover signed a deed of assignment with the Chinese on August 5.
Although the company has admitted it is in talks with the Chinese carmaker, details about the discussions have not been known until now.
An MG Rover spokesman confirmed that the deed of assignment represented the company's commitment as its part of a deal which is regarded as crucial to the car company's long-term survival.
"We have reached a technical transfer agreement and the filings at Companies House are part of the legal process. The transfer is legally binding, which is a measure of our confidence that the deal will be approved," he said.
The spokesman would give no details of what technology was being transferred to the Chinese or what MG Rover and Powertrain could expect in return. Full details of the collaboration will not be delivered until the Chinese government has approved the deal - possibly at the turn of the year.
MG Rover executives will be quizzed about the SAIC deal on Thursday when Phoenix Venture Holdings, the vehicle used by four of its directors to buy the car company for just £10 from BMW in May 2000, unveils its results for 2003.
Phoenix last month passed a resolution approving the technology transfer agreement with SAIC. The resolution refers to "the assignment and license by two of the company's subsidiaries, MG Rover Group Limited and Powertrain Limited (the assignors), to Shanghai Automotive Industry Corporation of various intellectual property rights owned or used by the assignors". The special resolution also affirms that any actions taken by directors in relation to the technology transfer are "approved as fully binding on the company".
The company is banking on the Chinese joint venture to deliver a new medium-size car, which is central to MG Rover's future. The carmaker's share of the UK market fell to under 2% in August, when it sold fewer than 2,000 vehicles.
Phoenix Venture Holdings' figures this week will show that the company remains stubbornly in the red with losses at the car company still approaching £100m a year. Phoenix has set up a special committee to identify savings of £100m a year.
Phoenix has refused to rule out job losses among the 5,000-strong workforce at its Longbridge plant in Birmingham. Any hint of redundancies will prove controversial.
Phoenix bought MG Rover with the backing of the Longbridge workers, and its four directors were feted as heroes. A weekend report said the four would receive a £4m payment into the trust fund that was set up for their retirement.
