MG Rover may be all but dead and buried but it seems the arguments will rumble on a while yet.
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Following recent arguments over which new Chinese owner is entitled to use what badges, and European distribution rights, now comes a row between Rover and Ford over a fund set up to protect Land Rover Freelander V6 engine supply.
According to the Daily Telegraph the dispute is over a GBP23m fund drawn down by Ford when MG Rover collapsed last April.
The paper said details of the wrangle with Ford are contained in MG Rover parent company Phoenix Venture Holdings’ delayed 2004 accounts which show that the company crashed into a loss of GBP40.9m, against a profit of GBP18m in 2003.
The collateral fund reportedly was set up by Phoenix to protect the supply of KV6 engines for Ford’s Freelander model if the British company’s engine business Powertrain went into administration and, when Powertrain collapsed, the fund paid out in full to Ford.
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By GlobalDataThe directors of Phoenix told the Daily Telegraph they were writing to Ford to ask it to account for how the cash was used.
Phoenix reportedly is arguing that the money should have been spent only on engine production and a Phoenix spokesman told the paper any extra cash should be repaid and then handed to an employee trust fund. “The legal position is unclear, but the moral position is clearer,” he said.
The Telegraph said Ford stressed that its costs were “well in excess of GBP23m”. A spokesman told the paper: “Frankly, we are very surprised by the statement from Phoenix – especially as they asked for this arrangement to be put in place. We agreed to do this as we understood it was critical to their ongoing funding.
“We went to great lengths to keep Powertrain going, even after MG Rover’s collapse, by paying the wages for two weeks and working with the administrators to try to secure a rescue package.”
The Daily Telegraph noted that MG Rover administrator Price Waterhouse Cooper has netted more than GBP10m in fees in the 12 months since the carmaker went under. In reports sent to creditors, PWC said it charged GBP8m at MG Rover and GBP2.1m at Powertrain.
PWC reportedly defended the scale of the fees. A spokesman told the paper: “The fees reflect the size of the administration and the huge amount of work that has been involved. To put it in context, we’ve generated in excess of GBP150m so our fees make up less than 7% of that figure.”
The paper said the reports reveal that the administrator has clawed back GBP68.5m of the GBP1.2bn owed to MG Rover’s creditors, which should net them up to 5p for every pound owed.
Creditors of Powertrain are likely to receive 19p for every pound owed, the Daily Telegraph said. PWC reportedly added it was “too early to say what the dividend will be or when we’ll be in a position to make a payment to creditors”.
The paper added that Phoenix’s 2004 figures, released late on Tuesday, do not cover accounts for MG Rover or Powertrain.
The highest-paid director received GBP259,000 out of total directors’ pay of GBP1.08m, down from GBP1.2m in 2003, the Daily Telegraph said.
