Although the directors of Phoenix Venture Holdings have been accused of benefiting from MG Rover at the expense of the company’s viability, the group of four have pledged R588 million in a bid to ensure the company’s future. The British government may also extend its loan…
Although the directors of Phoenix Venture Holdings have been accused of benefiting from MG Rover at the expense of the company’s viability, the group of four have pledged R588 million in a bid to ensure the company’s future. The British government may also extend its loan…
The said the £49m (R598m) in assets pledged by the Phoenix Four, led by John Towers, former chairman of MG Rover, included Studley Castle in Warwickshire, £1m in cash and £25m in “collateralised cash”.
Most of the assets they have pledged are thought to belong to Phoenix Venture Holdings, in which the four are the main shareholders. But it is not yet clear whether MG Rover’s administrators, PriceWaterhouseCoopers (PwC) would be able to accept their offer because of legal considerations.
“There are a number of challenges involved in getting to a position where the Phoenix Four can finally commit to do that,” said Jon Bunn, a spokesman for PwC.
Meanwhile, the UK government may extend its emergency loan to MG Rover, throwing a lifeline to workers.
CARtoday.com reported on Monday that the British government had agreed to provide R75 million in emergency funding to prevent the immediate lay-off of 6 000 workers at the company’s Longbridge plant. PwC said on Tuesday that the government loan would be “reviewed on a weekly basis” and may be extended if there was a “sound business logic”.
The government, trade unions and Phoenix Venture Holdings, which owns Rover, have vowed to find a way of keeping the company going.
But the British Department of Trade and Industry was cautious in its approach: “We will have to look at the circumstances next week in the light of any developments. We can’t prejudge where we will be then.”
One stumbling block to continued government support is the strict set of European Union (EU) competition rules, which prevent firms from receiving state aid.
The European Commission said on Tuesday that it planned to study the UK loan and was still waiting for information from the government.
“It would be helpful for the UK authorities to let us have the information we’ve asked for as quickly as possible so as to remove any uncertainty as to the compatibility of these aid measures with EU treaty rules,” Commission spokesman Jonathan Todd said.
Meanwhile, PwC are hoping to find a buyer for Rover and are looking to reopen talks with Shanghai Automotive Industries Corporation (SAIC).
According to Chinese state media on Tuesday, SAIC claimed it was not considering buying Rover, preferring instead to set up a joint venture.
Several parties have expressed interest in MG Rover over the past few days, but there have not been any firm offers, PwC said. Should any deal be reachable, it was likely to take weeks to negotiate.
PwC and the unions have estimated that Rover will need at least R156m to keep going in the interim. The company and its engine subsidiary, Powertrain, have been losing between R240m and R300m every month.
