London taxi maker Manganese Bronze on Thursday blasted the Chinese industrial culture as it pulled back from a deal which only two years ago was heralded as the company’s saviour, the Daily Telegraph reported.
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The newspaper said that Manganese’s licensing deal with Brilliance China, which has a tie-up with BMW, turned sour when Brilliance delivered only the first £900,000 instalment of a £2.7 million upfront payment to Manganese. On Thursday the black cab company was awarded £1.25m in compensation by arbitraters in New York, the paper added.
According to the Daily Telegraph, the group’s finance director Mark Fryer said: “We have learnt that Chinese companies do not act by the letter of the law. I don’t foresee us – given our experience with Brilliance – relying on the Chinese law in the future.”
Nevertheless, he said according to the paper, the company had “learnt from its mistakes”. Fryer told the Daily Telegraph: “The chief executive is in China now talking to other Chinese firms with which to work.” However, he conceded: “Of course we can’t guarantee the same thing won’t happen again. We wanted them to go and procure lower-cost parts but in the end we lost time. We did manage to get back our five vehicles, which sell at £30,000 in the UK market.”
The Daily Telegraph said that the company has meanwhile attempted to start on the road to recovery, unveiling two disposals and promising to return £4.5 million to shareholders. Shares in the black cab maker rose 33% as it revealed that it had sold its Coventry [London Taxis International] plant and its loss-making components division for £8 million each, the paper added.
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By GlobalDataThe newspaper said the surprise deals would leave the company with £2 million of profit after returning 25 pence a share to shareholders while Manganese would also have £3 million of cash and no debt while the sale of the components division, which last made a profit in 1998, to BSA will cost Manganese £400,000 and there will also be a £6 million write-off on the disposal.
According to the Daily Telegraph, Fryer said the business was “a slightly odd beast as it had no synergies with the rest of the company and was a tiddler in terms of market position.”
The newspaper noted that the number of London cabs has been static at 23,000 over the past five years, so Manganese will be shipping its first cabs to the US this month where Fryer hopes to open up a new market.
