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Rover banks on Phoenix
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May 2, 2000: 9:10 a.m. ET
BMW starts talks with UK firm, rules out return of rival bidder Alchemy
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LONDON (CNNfn) - U.K. investment firm Phoenix appeared to be Rover's last hope of salvation Tuesday, as it entered talks with the British carmaker's owner, BMW. The Munich-based company ruled out restarting negotiations with Alchemy, the bidder that pulled out of the deal on Friday.
Phoenix executives were meeting with BMW officials Tuesday in a bid to hammer out a deal, although doubts remained about Phoenix's ability to drum up the necessary funds.  BMW told CNNfn.com that the depth of Phoenix's financial backing would be a key issue in the talks.
"Phoenix is the only bid we have, and we hope for a decision within four weeks," said BMW spokesman Hubert Bergmann.
Press reports had said Phoenix would struggle to come up with enough cash, but the firm appeared to have raised enough financing to at least persuade BMW to open talks. Phoenix representatives said Tuesday they were not relying on any government money to keep Rover afloat, and claimed their proposal was "clearly superior" to Alchemy's plan.
The German firm has said it is no longer prepared to bear the losses at Rover, reported to be running at £2 million ($3.2 million) a day. If a buyer is not found, BMW (FBMW) said it would close Rover, with the loss of thousands of jobs. Rover's situation is so bad that, in essence, BMW will have to pay someone to take the business off its hands.
The affair has proved a huge embarrassment for BMW Chief Executive Joachim Milberg. Several press reports have indicated the future of the BMW boss is in doubt, although the company denied this Tuesday. 
The British government had pressed BMW to listen to the overtures of the Phoenix consortium, a collection of businessmen based in the U.K.'s Midlands region and headed by a former Rover chief executive. Phoenix has promised to maintain a high level of vehicle production at Rover, thereby saving a large proportion of the estimated 50,000 jobs at risk. Alchemy derided such a project as unviable, saying it wanted to scale back Rover production to smaller volumes of sports cars.
No return for Alchemy
BMW on Tuesday appeared to dash Alchemy's hopes of returning to the table.
"We stopped our negotiations (with Alchemy) last week," said BMW's Bergmann, adding "the differences between us were so large...we see no reason to start negotiating again."
The Financial Times reported Tuesday that Alchemy wrote to BMW over the weekend, setting out the terms on which it would restart talks.
"We have been in gentle contact over the weekend," Alchemy managing partner Jon Mouland told the British Broadcasting Corp. on Tuesday. "We have left a door open."
Alchemy on Friday ended talks that had continued for several weeks, citing disagreement over the financial terms of a deal to rescue the troubled carmaker.
The closure of Rover would have a devastating impact on the economy of the West Midlands region of Britain, where its huge Longbridge factory is a leading employer. 
-- From staff and wire reports
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