12/04/2005

Directors offer £49 million to aid MG Rover

The owners of the beleaguered MG Rover group have pledged £49 million in assets in a bid to help save the company.

The directors of Phoenix Venture Holdings (PVH) have pledged the assets in order to provide additional time for the administrators, PricewaterhouseCoopers (PwC), to find a buyer for both MG Rover and engine-making subsidiary Powertrain.

The pledge from the directors, including the original 'Phoenix 4' businessmen who purchased MG Rover from BMW in 2000 for a nominal £10, follows a £6.5 million government loan which is keeping the company – and its 6,000 strong workforce – going for another week.

The assets are believed to include Studley Castle in Warwickshire, which is reportedly worth up to £8 million. However, it is believed that even if the full amount of the assets were received, it would still only be enough to keep MG Rover going for another two months

The pledge was welcomed by PwC but Tony Lomas, joint administrator and PwC partner, said: " There are a number of challenges in getting to a position where the directors can turn that into a cash injection. Directors' confirmation of whether all or any of the assets offered can in fact be turned into cash is awaited."

Mr Lomas said that if the assets could not be used, the directors had said that they intended to pledge their shares in PVH " for the benefit of employees and their families".

MG Rover went into administration on Friday, following the collapse of a possible deal with Chinese carmakers the Shanghai Automotive Industry Corp (SAIC). Car production at the Longbridge plant in Birmingham ceased on Thursday and yesterday thousands of the firm's employees were sent home on full pay, while PwC worked on re-establishing a partnership deal with SAIC. However, it was reported yesterday that SAIC were unlikely to consider a joint venture with MG Rover while the company was in administration.

It has been reported that several companies, including Alchemy Partners, which attempted to purchase MG Rover in 2000, have expressed interest in the company, but a firm offer has yet to be made.

It has also been reported that the government may extend the loan granted to the company if it looked like the business could survive.

Yesterday PwC confirmed that MG Rover and Powertrain were incurring "very significant losses" – estimated to be between £20 and £25 million per month.

(KmcA)








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