Wagon Automotive enters administration as bank talks break down
Around 500 Midland jobs are under threat after car parts firm Wagon Automotive confirmed it planned to appoint administrators to its UK business.
The move follows the breakdown of talks with banks over a funding rescue package for the ailing company.
The Birmingham-based firm, which has plants in Coventry and Brownhills, intends to appoint restructuring firm Zolfo Cooper as administrators.
As well as its UK staff, the company employs 4,500 people across Europe.
The firm said decisions on whether to put the overseas companies into administration had not been taken, although it added that some may be able to trade without needing insolvency protection.
According to weekend reports, the company's fate was sealed when banks, led by Government-backed Royal Bank of Scotland, refused to contribute 12 million euro (£10.4 million) to a 50 million euro (£43.3 million) funding package.
Wagon - controlled by American billionaire Wilbur Ross - failed to persuade banks to contribute to the measure which would have kept it running for another three months, the Sunday Times said.
Shares in Wagon were suspended in October after it reported a "steep deterioration" in the European car market and said it was in talks with lenders about its funding situation.
It has come under further pressure as car makers continue to cut production.
Wagon has its roots in Wagon Repairs, a business set up at the end of the First World War to maintain railway rolling stock. It was chosen by Ross as the foundation for a European car parts empire.
But the company has struggled in the face of competition from low-cost rivals and a car market slump.
According to the latest figures from the Society of Motor Manufacturers and Traders, a total of 100,333 new vehicles were registered last month - a huge 36.8% fall on a year earlier.
In Brownhills, Wagon makes panels and door parts for Honda, Ford, General Motors, Land Rover and Nissan. The smaller Coventry site makes shock absorbers for non-automotive clients, including liftmakers Otis and Schindler.
Its car-making clients had put up 30 million euro (£26 million) and Ross was understood to have been prepared to contribute 10 million euro (£8.7 million) through the purchase of one of Wagon's subsidiaries.
But the rescue fell though when the banks - which had agreed loans of 155 million euro (£134.2 million) in the summer - decided against giving more, the report said.
Dean Bradley, sales and marketing director at Coventry-based Oleo International said the business, a subsidiary of Wagon, was trading well and was profitable.
He said he was expecting news on the situation with Wagon today. Oleo International, which makes parts for lifts, employs 110 workers in Coventry and about 34 at its operation in Shanghai, China.