Land Rover paid between £15m and £20m to settle the bankruptcy row over Discovery chassis supplier UPF, according to the Daily Telegraph.
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The paper said LR would buy UPF#;s £49 million debt in exchange for accountants Grant Thornton replacing KPMG as receiver of the failed component company.
LR was granted two court injunctions to stop KPMG halting chassis frame supply unless Land Rover handed over £46 million – £35m for goodwill and £11m in other costs related to the contract. Land Rover#;s counter-offer was £1 million up front and a 50 percent increase in the frame price.
Around that point, the dispute became public and, according to KPMG, the Daily Telegraph said, Land Rover decided to fight the issue through the media.
KPMG receiver Roger Oldfield told the newspaper: “There was value in the sole supply contract. We requested a sum and expected them to negotiate. They didn’t make an offer or come to the negotiating table prior to the first injunction. They decided to fight through the media. We are not here to fight in the media. We were wanting a proper, businesslike negotiation. It was frustrating.”
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By GlobalDataOldfield added that the three banks which had put UPF into administration were “very pleased” with the outcome and also said that the deal realised more than selling or breaking up UPF would have done.
A Land Rover spokesman responded to the newspaper by saying that the group had refused to negotiate before the first injunction though he declined to comment on any media leaks.
“We are not disputing that KPMG behaved in anything other than a professional manner. [Land Rover chairman] Bob Dover feels that receivers should not be in a position to hold their clients to ransom,” the spokesman added.
The Daily Telegraph said that Land Rover accounts for 60 percent of UPF’s £32 million sales. UPF supplies the Discovery chassis frames for £308 each, £110 less than rival supplier GKN would charge.
The newspaper said Grant Thornton would take control of UPF at the beginning of next week and consider a management buy-out or a trade sale. These options could involve GKN, which already supplies components to Land Rover and is hoping to replace UPF as supplier of chassis frames for the new Discovery in 2005, the newspaper added.
Meanwhile, the Financial Times reported that Land Rover is seeking support from other vehicle makers to press the UK government to reform company insolvency laws based on the US Chapter 11 procedures which give companies court protection from creditors while they restructure.
The FT said that ministers, however, believe reforms already proposed address any shortcomings.
Ministers also believe, privately, that Land Rover negotiated a loss-making price for chassis frame supplies from UPF and that KPMG#;s subsequent actions were not surprising given that background, the FT added.
