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April 13, 2005

UK: MG Rover workers’ families protest in London; receiver says no funds for dealer warranty reimbursements

Partners and children of MG Rover employees have staged a demonstration calling for the ailing firm’s rescue. A convoy of coaches headed from Birmingham to London’s Downing Street (where Prime Minister Tony Blair resides at number 10) to hand the British Prime Minister a letter.

Partners and children of MG Rover employees have staged a demonstration calling for the ailing firm’s rescue. A convoy of coaches headed from Birmingham to London’s Downing Street (where Prime Minister Tony Blair resides at number 10) to hand the British Prime Minister a letter.

One of the organisers of the protest, Liz Hanks, called for improved redundancy packages in case the firm cannot be saved. According to a BBC report, workers have been told that they will receive £280 for each year worked at the company, to a maximum of twelve years – which means there is a £3,300 cap on payments.

Mrs Hanks, whose husband has worked in the Longbridge paint shop for 15 years, told BBC online: “Our husbands deserve the same as other car workers, such as those at Ford in Dagenham who received between £30,000 and £40,000.” 

In other developments, administrators PwC said that they are continuing efforts towards securing a deal with the Shanghai Automotive Industry Corporation (SAIC) but admitted there were no signs of progress. Reports from China continue to suggest that the company is not interested in talking to the administrators and that the SAIC banking team involved with the JV negotiations last week has now been disbanded.

PwC also confirmed that they do not have sufficient funds to reimburse dealers for honouring warranties on new cars. Previously, Rover cars were repaired free of charge by its dealers, who were then reimbursed by Rover.

Yesterday’s pledge by the so-called ‘Phoenix Four’ who own MG Rover’s parent company, Phoenix Venture Holdings, to commit £49 million worth of assets to the cause of keeping Longbridge going, was undermined by the news that the value of the assets could be a lot less than that.

Phoenix director John Towers said in a statement: “It is not yet clear what the value of the PVH shares is. PVH has significant assets totalling around £50 million but we believe a reasonable estimate of its present value is between £10 million and £30 million. However it is important to note that this value is subject to attack by 3rd parties associated with the administration of other parts of the PVH Group”.

“The Phoenix Directors have also offered these assets to PwC to help fund the administration process of MG Rover Group Ltd and Powertrain Ltd which would make less assets available to the trust but this route would clearly also be of benefit to the Longbridge workforce”.

It also emerged today that MG Sport and Racing Limited (MGSR) – part of Phoenix Venture Holdings – has passed into administration.
 
MGSR builds and sells the “MG SV” high performance car and leads the MG Group’s motor sports activities. MG Sports and Racing is a stand-alone business, operating from an independent site at Longbridge, employing 48 staff.

Steven Pearson, joint administrator at PricewaterhouseCoopers, said: “Significant investment has been made in the “MG SV” and sales of the car have recently commenced. There is an immediate opportunity for an investor to acquire a niche car manufacturer that has unique design and production capabilities. We are currently exploring how the company can be restructured and are keen to hear from anyone who is able to take the business forward.”

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