UK: MG Rover faces renewed £58 million claim for damages - paper

By just-auto.com editorial team | 19 December 2003

The Daily Telegraph newspaper, which for weeks has been running stories on the scale of remuneration for MG Rover directors, on Friday reported that the car company is now facing a renewed £58 million claim for damages from a former joint venture partner.

The report said the former directors and creditors of Motor Vehicle Industries (MVI) are planning to restart their stalled legal action within four weeks.

The Telegraph said the original writ, lodged in the High Court last December, has been put on hold since April when MVI went into administration and then was sold and added that the action is being funded by Charles MacKinnon, a former director of MVI, who said the action was supported by Kroll, which is acting for MVI's creditors.

According to the Daily Telegraph, the dispute centres on a joint venture set up by MVI and MG Rover to distribute cars made by Indian vehicle manufacturer Tata. Papers lodged with the High Court claim that MG Rover agreed to pay £5 million to MVI for a 50% stake in the joint venture, which was called Motor Distributors Ltd (MDL), in March 2001, the report added.

The paper said that the deal hit the rocks within a year, with MVI complaining that, by February 2002, MG Rover "deliberately and systematically excluded MVI from all further discussions" about the joint venture and from talking to Tata.

MG Rover has gone on to launch a variant of Tata's Indica small hatchback as the CityRover and has also clinched a deal to distribute Tata's pickup truck and SUV derivatives through its UK dealer network.

The Telegraph said matters worsened when MVI's chairman Michael Kimberley - who is named as a joint defendant with MG Rover in the claim - resigned in April and, by early May, the claim says, "was engaged by MGR and/or its holding company Phoenix as senior adviser providing services to MGR".

The newspaper said that MVI is claiming £58 million in the writ, which it says is its share of five years' of forecast profits from MDI.

An MG Rover spokeswoman confirmed to the Daily Telegraph that Kimberley was a consultant to the car company on a number of projects and added that the car maker had not heard from MVI nor the administrator since August when a stay on proceedings was lifted.

She added: "In the event of any further claim, this will be vigorously defended because the company believes it is wholly without merit", the Daily Telegraph said.