PriceWaterhouseCoopers says five parties are in line to buy parts or all of MG Rover. The administrator of the stricken British company is also considering legal action to force the ‘Phoenix Four’ to repay the R480 million they received over five years.
PriceWaterhouseCoopers says five parties are in line to buy parts or all of MG Rover. The administrator of the stricken British company is also considering legal action to force the ‘Phoenix Four’ to repay the R480 million they received over five years.
at the weekend quoted Price Waterhouse Coopers as saying there was an “outside chance that some form of production could recommence at (the) Longbridge (plant)”.
Industry sources said two groups, thought to be from Iran and Russia, were interested in making bids for MG and Rover cars, while three bidders wanted to buy the rights to build MG TF roadsters.
Tony Lomas, a partner at PWC, said that the two “credible and interested parties” were concerned about what intellectual property rights were bought by Shanghai Automotive Industry Corporation in a R804-million deal last November.
However, Lomas was not confident that the Birmingham-based car plant, which was shut down last month, could return to full production: “The cost of the challenge should not be underestimated. Engine production would be a lesser but demanding challenge.
“The potential buyers are known to be looking at the alternative scenarios of continuing production at Longbridge or relocating it elsewhere,” he added.
The Iranian consortium aims to kick-start the Longbridge plant as soon as possible, producing up to 150 000 Rover 75 and 25 model cars over the next 18 months to meet an immediate backlog of demand for new vehicles in Iran.
Under the plan, Longbridge would gradually switch from finished cars to the production of kits for final assembly at plants in Iran, with an ultimate target of manufacturing 150 000 cars a year.
In principle, the plan could keep Longbridge operating until the end of the decade, saving thousands of jobs in the West Midlands. And, sources say the Iranian proposal could be combined with other offers such as spinning off the MG business for buyers more interested in the European and US markets.
Meanwhile, the Phoenix Four directors (John Towers, Peter Beale, John Edwards and Nick Stephenson) are set to face legal challenges that could force them to pay back large parts of the sum they received in the five years they were running MG Rover.
Legal experts are advising PricewaterhouseCoopers that it may have at least two different courses of action to recoup substantial parts of the money. The trustees of the MG Rover pension funds are currently pressing the four directors to make contributions to help cover a pensions shortfall at the collapsed manufacturer.
If they do not pay up, the trustees could force the company they control, Phoenix Venture Holdings, into administration and then press the Pensions Regulator to force the four directors to pay up.
The directors are also facing possible action by the Department of Trade and Industry, which this week receives a report into the collapse of MG Rover prepared by Sir Bryan Nicholson, chairman of the Financial Reporting Council. The British department of trade and industry is likely to use this report, and information from PwC, to launch legal actions to have the four disqualified as directors.
The four jointly bought MG Rover for £10 (R120) in 2000 from BMW, which also lent the group R5,1 million in an interest-free loan.
The four created Phoenix Venture Holdings as the parent company and parked the cash from BMW in a subsidiary, with MG Rover’s operating companies in other subsidiaries.
Over the five years between the BMW deal and MG Rover going into administration, the four directors received around R480 million in salaries, interest payments and contributions to pension funds.
PwC was advised that it could pursue the Phoenix Four by claiming PVH could not afford to make the payments to the directors.
