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April 20, 2005

UK: MG Rover said to have little left in the assets cupboard

MG Rover losses tripled to nearly £250 million last year and the group has almost no assets left, a preliminary view by the administrator, Price Waterhouse Coopers said, according to the Daily Telegraph.

MG Rover losses tripled to nearly £250 million last year and the group has almost no assets left, a preliminary view by the administrator, Price Waterhouse Coopers said, according to the Daily Telegraph.

The paper said that PWC published a prospectus on Tuesday and distributed it to 40 possible buyers for the defunct business which collapsed last week but, according to one who has seen the document, it shows “a company stripped bare” and contains only a brief, unaudited profit and loss account for 2004 – Rover lost £89 million in 2003.

The Daily Telegraph said the prospectus also shines a light into the frantic financial manoeuvring aimed at keeping the business alive – Rover does not even own its stock of finished cars nor its components, as it had resorted to £100 million of stock financing.

The paper said it has very few assets left after the sale of its real estate, engine technology and components business by the so-called Phoenix Four, the consortium led by John Towers which controlled the company – among them, the four have received as much as £40 million in various payments from MG Rover.

Jon Moulton, managing partner of Alchemy, the venture capitalist whose bid for MG Rover was effectively halted by the government five years ago in favour of the Phoenix Four, told the Daily Telegraph: “It took me two minutes to read it. The prospectus says they can deliver the MG brand, but makes no reference to the Rover name at all. I have never seen anything like this in a company of this size. There just is hardly anything there.”

Moulton reportedly said he had not decided if he was interested in any of the remaining assets.

Tony Lomas, the administrator from PWC, told the Daily Telegraph: “This is a summary only of the production facilities for which we are responsible at Longbridge.” He reportedly added that, when the list of potential buyers is narrowed down, a ”significant amount of detailed information will be provided”.

The Daily Telegraph added that the European Union held out the possibility of extending aid to Rover on Tuesday when it said it might divert £70 million of structural funds to help the workers laid off at Longbridge and at suppliers to the defunct company.

However, the newspaper noted that the EU money consists of funds already promised to the West Midlands over the next few years as part of the EU’s structural investment programme.

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