* Recalls 400 TX4 taxis produced since February
* Suspends sale of new TX4 models
* Says sales suspension to materially impact cash flow
* Working with supplier in China to identify problem
* Shares to remain suspended until solution arrived at
By Karen Rebelo and Brenton Cordeiro
Oct 12 (Reuters) - Manganese Bronze Holdings Plc, the maker of London's iconic taxis, suspended trading in its shares on Friday and said its financial position was unclear after it discovered a safety defect in its new TX4 model that led to a recall and halt in sales.
The company, which has been reporting losses since 2008, said it recalled about 400 TX4 London taxis after it found a defect in a steering box that was introduced in February.
"The suspension of sales will have a very material and detrimental impact on the group's cash flows and the board is working to establish the options available to the business given the impact on working capital," the company said in a statement.
Manganese Bronze, which is 20 percent owned by China's Geely Automobile Holdings Ltd, said it was working with Geely to fix the steering box faults.
"We're not a in a position yet to give a view as to what it will cost us to fix it, nor can we make an estimate of what the cash impact will be," Chief Executive John Russell told Reuters.
"We need to work our way through to the technical solution and then get a sense of how long that's going to take and we can make the judgements on both the profit effect and the cash effect but that's going to take us some time," he said.
The steering box is a design from a new supplier in China, which was introduced in the company's Coventry factory in late February.
"We've now got teams of guys working with the supplier in China and we're trying to identify the root cause," Russell said, adding that the defect had safety implications.
The company, which has been struggling with falling sales in the United Kingdom, also sells its cars in China and Azerbaijan.
Manganese Bronze shares have lost two-thirds of their value this year. They closed at 10 pence on Thursday, valuing the company at about 3 million pounds ($4.8 million).