Companies owed money by MG Rover are likely to be paid a maximum of 5p in the pound after the administrators of the failed car maker received claims for more than £1.37 billion, the Financial Times (FT) reported, citing documents sent to creditors ahead of a meeting scheduled in Birmingham on June 10.
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The paper said administrators PricewaterhouseCooper’s (PwC) initial analysis shows that, Rover – once Britain’s biggest car maker – will have assets of just £80.5 million left after paying off secured loans to banks and preferential creditors.
The report noted that even those assets are unlikely to be available in full to creditors as PwC has warned that its own costs would be “substantial” – the analysis covers only car maker MG Rover, not its sister engine making company, Powertrain, also in administration.
The FT said the news came as the British government faced intense pressure to launch a full-scale investigation into the collapse of Rover last month – the Financial Reporting Council (FRC), which handed a confidential report to the Department of Trade and Industry (DTi), said its investigation of Rover’s accounts had raised “a number of questions” the government might want to examine.
According to the Financial Times, the PwC analysis, sent to creditors, also shows that Rover was losing £25 million a month before its collapse.
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By GlobalDataThe paper said the single biggest creditor of Rover is Phoenix Venture Holdings, its former owner, which – together with its subsidiaries – is owed £469 million.
The FT said Phoenix on Thursday repeated its pledge to donate all its assets, which would include any pay-out from Rover’s administrators, to a trust for former employees of the car maker, but it could not say whether the claims against Rover would be enforced.
The second-biggest creditor is the Rover pension fund, which is owed an estimated £325 million – far more than the deficit previously published, the FT noted.
The Financial Times said trade creditors are owed £102 million while dealers are owed £48 million, including promised bonus payments. BMW, which sold Rover for £10 to the four owners of Phoenix five years ago, is owed £8.1 milllion, the report added.
The Financial Times noted that the size of Phoenix’s claims on Rover is likely to add to the sense of outrage among politicians and trade unions at the behaviour of the four owners – dubbed the Phoenix Four by media – who paid themselves approximately £40 million in the past five years, this could further increase pressure on the UK’s department of trade and industry to hold a full inquiry.
The FT said the FRC, after handing in its review of the published accounts, said it would “raise a number of questions relating to the affairs of MG Rover and its associated companies which . . . maybe relevant for the DTI to consider” – it would go no further but said it would not be forcing Phoenix or Rover to restate accounts, its strongest sanction.
Phoenix reportedly responded by calling the FRC’s conclusion “woolly” and said its accounts were accurate, and had been audited.
The DTI told the Financial Times that Alan Johnson, trade and industry secretary, would decide “shortly” whether to take any action and, if so, what that action should be.
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