Phoenix Venture Holdings, the former parent company of MG Rover, is facing legal actions of more than £50m from America’s Caterpillar and India’s Tata, its delayed 2004 accounts reveal, according to the Daily Telegraph.
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The paper said the actions are frustrating pledges by the so-called Phoenix Four, the four directors who own the company, to hand over between £10m and £50m from any proceeds from PVH‘s assets to a trust for the benefit of former workers at the automaker’s defunct Longbridge factory.
According to the accounts, Caterpillar is claiming £47.3m from PVH under a guarantee scheme agreed at the time of Caterpillar’s £78.6m acquisition of PVH’s Xpart business in August 2004, the Daily Telegraph said.
Separately, car giant Tata, which supplied its Indica cars to be re-badged as City Rovers, submitted a claim in May last year for £5.3m, the report said. The directors reportedly say in the accounts that “the likelihood of a payment to settle the claim is remote” in both cases.
PVH is also facing a “potential claim for £900,000” from HM Revenue & Customs, which the directors do not believe “constitutes a valid joint and several claim”, the paper added.
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By GlobalDataA PVH spokesman told the Daily Telegraph that, until these legal claims are resolved, cash cannot be paid to the ex-employees’ trust.
But he reportedly said a “meaningful amount of money would be transferred” from the sales of Studley Castle, a conference centre, 12 freehold sites of former dealerships and £1.5m-worth of tools.
The four men – John Towers, Peter Beale, Nick Stephenson and John Edwards – might even pay an interim payment before then, although he declined to tell the Daily Telegraph when or how much.
The paper said the accounts also reveal that Deloitte, PVH’s auditor which is under investigation by the UK’s Accounting Investigation and Discipline Board for its work at the company, made £4.1m from non-audit advisory work at PVH in 2004. Most of this related to the sale of the car parts business.
Deloitte declined to comment to the Daily Telegraph, citing client confidentiality. However, a spokesman reportedly confirmed that the 2004 accounts were qualified.
