April 24 (Bloomberg) -- Iran Khodro Co., Iran's largest carmaker, is interested in buying assembly lines from France's Peugeot SA and Germany's DaimlerChrysler AG, not from the U.K.'s bankrupt MG Rover Group Ltd., its chief financial officer said.
Iran's ISNA student news agency reported on April 21 that Iran Khodro and domestic competitor Saipa Group, were considering buying MG Rover, quoting an unidentified official of Iran's Ministry of Industries and Mines.
``Iran Khodro managers haven't held any negotiation with Rover,'' Iran Khodro CFO Reza Raie said in a telephone interview in Tehran today. ``Maybe we'll purchase production lines from Germany and France -- from DaimlerChrysler and Peugeot, for example. That's under discussion, not Rover.''
MG Rover, the maker of MG sports cars, is in the process of firing about 5,000 workers after Shanghai Automotive Industry Corp. scrapped takeover talks and left the insolvent company near collapse. PricewaterhouseCoopers on April 8 took over the MG Rover's carmaking and engine units, which date back 100 years.
Khodro, which in December secured a $100 million loan from international banks led by Standard Bank Group, is increasingly relying on foreign expertise to build cars. It's expanding cooperation with Peugeot, whose 405 and 206 models it already assembles since 1998. Last year, it turned to Renault SA and completed an agreement to produce low-consumption, low-cost Logans as early as March 2006.
Khodro needs to borrow an additional 500 million euros ($653 million) to invest in projects including assembling Mercedes- Benz's 300 and 220 models, Peugeot's 307 and Renault's Logan, Khodro said in October. The company said it may sell bonds as part of its financing plan.
``We're negotiating with BNP Paribas to issue bonds,'' Raie said today, declining to provide an amount or a timeframe.
The government-controlled carmaker, which was founded in 1962, plans to boost production to 550,000 vehicles this year from 450,000 cars in 2004, Raie said.
Khodro's deals with foreign carmakers will help replace Iran's national pride, a retro-style car called Paykan that went out of production this month after 32 years. The car, a favorite among Tehran taxi drivers, is a descendent of Britain's Hillman Hunter. The Paykan consumes as much as 17 liters of gasoline per 100 kilometers (13.8 miles per gallon), more than twice that of a Logan, adding to the city's growing pollution problems.
Abroad, Khodro has signed investment contracts in Syria and Senegal to assemble Samand cars, its best-selling model, starting next year.
Negotiations with ``other Middle Eastern countries as well as CIS states are also under way,'' the CFO said.
The country will also start producing Samands in China as part of a $60 million joint venture project from next year, the state-run Islamic Republic News Agency reported today. Production will start with 20,000 units and rise to 120,000 in three years, IRNA said.
By Marc Wolfensberger in Tehran at firstname.lastname@example.org