Four directors who took pay and benefits worth £40 million (€58.3 million) out of MG Rover have offered assets valued at £49 million to help keep the car manufacturer viable, as administrators struggled to reopen collaboration talks vital to its survival with Shanghai Automotive Industries Corporation (SAIC).
The move by the so-called "Phoenix Four" appears intended to counteract criticism of their conduct in making themselves multimillionaires after buying MG Rover for £10 in 2000. A representative said: "They want to help out as much as they can."
The directors' offer could save UK taxpayers extra costs in keeping the company as a going concern by paying the salaries of 6,100 staff. On Sunday, the government provided a £6.5 million unsecured loan to the administrators to meet one week's payroll. But administrators and union officials said yesterday that it could take three weeks to do a deal, meaning a further £13 million bail-out could be needed.
Ian Powell of PricewaterhouseCoopers (PwC), an administrator, said the assets offered by the directors, led by John Towers, former chairman of MG Rover, could potentially be used as collateral for working capital loans.
However, Mr Powell is concerned that legal limits on the use of the assets could make it difficult to secure loans on them.
The businessmen who own Phoenix Venture Holdings, the company that controlled MG Rover, would, for example, put up Studley Castle, a Warwickshire stately home and conference centre they hived off from the car business. They are also offering £1 million in cash and £25 million in "collateralised cash" bringing total assets on offer to £49 million.
The chances of administrators striking a collaboration with SAIC allowing MG Rover to survive in anything resembling its current form looked slim yesterday, even though PwC officials said the Chinese vehicle maker had much to gain.
Steven Pearson of PwC said that "the fundamental value of the business is in its know-how" and, although SAIC owned intellectual property for the "base models" of several MG Rover cars, "it does not have the technical capacity to make them".
But much know-how would be lost through redundancies at MG Rover unless a deal could be struck quickly.
The European Commission yesterday asked the UK to notify its proposed £6.5 million bridging loan to MG Rover "within 24 hours", although officials indicated that Brussels was unlikely to stand in the way of a limited and short-term bail-out.
The UK government has promised to provide a loan to the failing carmaker, which is losing up to £25 million a month.
A dozen businesses have contacted PwC to express an interest in acquiring MG Rover as a going concern.
The administrators are to explore these approaches before considering breaking up the business, for example by selling the MG sports car marque. This brand still belongs to MG Rover, unlike the Rover name, which is owned by BMW. - (Financial Times Service)
