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Discussion Starter · #1 ·
I have been encouraged to post my thoughts on the current situation in this forum. Make of them what you will!

1. MG Rover is a company. The government throwing money at any company which is not profitable is a hideous waste of taxpayers money regardless of the heritage of said company.

2. MG Rover is a brand which many people feel strongly about. However pledging money for support is completely pointless IMO. One website taking pledges has raised £24,000 which as far as I can tell may keep the company running for an extra 40 minutes or so.

3. MG Rover does not need loans and grants. It needs a serious investor and if the P4 have to let it go for a tenner, then so be it. So long as the brand continues to live and Longbridge jobs are safe, then we should all be happy. I bet you £50 that if Ford (for example) came forward tomorrow to buy them out, this forum would go mad with rage saying end of British manufacturing great etc etc which would be entirely hypocritical of posts made to date. So long as the brand and jobs at Longbridge (and supporting suppliers) are safe, or at least as many as possible are, then we should all welcome any serious investor with open arms.

4. The demonstration today is a good way of attracting press attention, however I think it needs to show a support of the brand and the jobs and politics should be left out. Finger pointing will get us no-where...we need a serious investor and a demonstration of support will show onlookers that people care about the brand, the workers and that there are still thousands and thousands of potential customers.

5. Any investor needs to realise new models sharpish. My mum loves Rovers and she has a 45 but she is not going to upgrade it for essentially the same car just with a newer plate and lower miles.

6. Whilst the SV is a nice car it's development was a total waste of money and onlookers will be noticing this.

7. The China deal had far too much effort (in terms of not concentrating on other things/potential investors) put into it IMO and was very blinkered. The fact it all fell through and MGR are screwed shows this. I would put money on there being an attitude in the middle of the talks (when everything looked rosy) of "these losses don't matter, those costs don't matter, we'll be loaded with investment money soon" and the business was allowed to "slip" a little.

Those are just a few things I have observed and look forward to discussing!
 

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Russ... you really should post around here much more often mate ;) Sadly, I'm at work so am limited in what I can post... but I promise I'll be online later today to discuss :)

Regards

John
 

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Russ some good points mate. The "loan(s)" are meant to tie them over until a deal is struck. What is important here is that this is the last British bulk car manufaturer left and it would be a travesty to see it go. This seems to be the general public opinion, including government :)

The SV was never meant to make money. It was a showcase that says "look what we can build" it shows the company is serious as a developer of new cars, has the capacity to design and build them if it has the capital, and it has been well recieved worldwide. Forget the costs, just look at the car, the styling and performance.

I'm more upbeat today about the future, although it will emerge as a very different company than it is today.
 

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Discussion Starter · #6 ·
Bazza said:
The "loan(s)" are meant to tie them over until a deal is struck. What is important here is that this is the last British bulk car manufaturer left and it would be a travesty to see it go. This seems to be the general public opinion, including government :)
I agree Baz with 2 comments on that:

Firstly the "loan" is only that if it can be paid back...if MGR go truly bust then it's dead money, and that's taxpayers money...

Secondly whilst I agree with the fact it's the last manufacturer and it will be a shame to see it go etc, it's also a business and if it's not viable then it shouldn't be kept going for the sake of it, simply because all the reasoning behind the brand and heritage disappear...it becomes "The British Government's Moneydrain" and will eventually just become a laughing stock in the motoring world.
 

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its not flogging a dead horse though, people want the cars, the demand is there, especially for the MG's. The new metal is/should be very close to production once this is out the company will become profitable again imo

my question is now MGR have gone into administration does this mean the BMW loan is gone therefore if they were to make a profit next year they wouln't have to pay it back?

andy
 

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Discussion Starter · #8 ·
AndBurG said:
its not flogging a dead horse though, people want the cars, the demand is there, especially for the MG's. The new metal is/should be very close to production once this is out the company will become profitable again imo
Yes but in order for things to turn around they need serious investment, loans will just keep them running. The government can't lend a loss-leading company money forever.

AndBurG said:
my question is now MGR have gone into administration does this mean the BMW loan is gone therefore if they were to make a profit next year they wouln't have to pay it back?
No, administration is simply a process whereby a third party looks at the books etc and starts looking at what's salvagable...it's only if the company goes into liquidation/bankrupt that such a thing would happen.
 

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They've gone into Administration, therefore no longer have Loan / Pension liabilities. Basically all the contracts / deals are made from scratch.

As for the Govt.... suppose they loss of jobs totals 20,000 as predicted by the press etc. Assuming people get £60 a week job seekers, that's 1.2 million a week....... so the net costs of keeping it going may be worth if (if I buyer is close)....
 

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Discussion Starter · #11 ·
Official line:

Administration - this is a court procedure that gives the company some breathing space from any action by creditors. A court can grant an administration order to enable the company to:

- survive, in whole or in part, as an ongoing business;
- organise a voluntary arrangement or compromise with its creditors;
- get a better realisation of assets than would be possible if the company went into liquidation.

The procedure is managed by an administrator, who must be an authorised insolvency practitioner.


Basically I think this means that their debts aren't written off, but they don't currently have to keep up payments etc and any agreements can be re-arranged. However I'm not sure that means the debt is just written off.

You can read more information here .
 

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Russ said:
1. MG Rover is a company. The government throwing money at any company which is not profitable is a hideous waste of taxpayers money regardless of the heritage of said company.

QUOTE]

Russ, although I see your point I dissagree. I don't believe it is a waste of taxpayers money. This money is keeping 6000 people in eployment, 6,000 people who may spend extended periods of time on the dole if they lost their jobs. That may end up costing the taxpayer more. I know that this money will run out very quickly, but it may act as a buffer for the time being until an realistic buyer is found.

You are correct though, serious investment is required and government loans/grants/whatever can't go on forever, keeping the business going.

Question about pensions, have these guys lost them? Will they be entitled to any redundancy package if the company goes bust completely?

I do agree with another statement on this thread though, that the SV was a waste of money. The company simply wanted to show what it was capable of? I thought that's what concept cars were for. What was another huge waste of money was the company directors treating themselves! (What was it, £10Million?) That's rediculous.

Anyway, rant over.
 

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This is long but lots of information -

Administration http://www.companyrescue.co.uk/company-rescue/options/administration.html

1. Company rescue (as a going concern) being the primary objective.

2. If that is not possible (or if the second objective would clearly be better for the creditors as a whole), then the administrator can achieve a better result for the creditors than would be obtained through an immediate winding-up of the company, possibly by trading on for a while and selling the business(es) as a going concern.

3. Only if neither of the first two objectives is possible, can the administrator realise any property to make a distribution to secured and/or preferential creditors.



Receivership
http://www.companyrescue.co.uk/company-rescue/options/receivership.html




It's clear from skim-reading those why it was so badly inaccurate for Patricia Hewitt to announce receivership rather than administration.
 

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I can only speak from experience... but when Leicester City FC when into Administration a year or so ago they owed £75m or more....

Investors came up with £10m, cleared all debts etc....

Basically they assessed the value if broken up, and if they could raise that for the creditors, it's a goods as breaking it up for them, so thats what they get!


If MGR owes (for example) £200m.... but can only raise £100m from the breaking up of the business, then the creditors can state that "somone" must only raise £100m and can take on the business without debt!

The £100m is all the people owed money will get, and if somone can raise £100m its theirs....
 

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Discussion Starter · #16 ·
Yep that's a very good breakdown, basically it's saying to creditors "right we can raise this much money and you take it or we go bust and you only get the same amount anyway".
 

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Russ said:
1. MG Rover is a company. The government throwing money at any company which is not profitable is a hideous waste of taxpayers money regardless of the heritage of said company.[/QUOTE=Russ]

True, but as I pointed out on another post, the 119,000 people who bought MG Rovers last year would have bought French/German/Italian/American/Japanese cars instead if MG Rover didn't exist. Without MG Rover, that money (by my crude guestimate about £600 milllion a year) will be drained out of the UK economy every year for as long as people buy cars.

If the company was still losing £800 million a year then I'd give it up as a bad joke (maybe they still are, bar for creative accounting - who knows?) but to have narrowed the debts down to £70 million a year, I'm fairly confident that with money to develop a new model they could turn a modest profit in a year or two.

When you add the cost of paying people benefits, (quite aside from the human misery and the damage to the nations morale), there may well be good economic reasons to keep the company alive - but it would need to be tightly controlled. A bad car slated by the press really would be a disaster.

Russ said:
2. MG Rover is a brand which many people feel strongly about. However pledging money for support is completely pointless IMO. One website taking pledges has raised £24,000 which as far as I can tell may keep the company running for an extra 40 minutes or so.[/QUOTE=Russ]

But that's like people saying there's no point in me voting because 1 vote doesn't make a difference :)

I pledged my £50 - of course it's purely symbolic, there's no way they are going to raise anything close to enough to revive the company, but it shows the government that (albeit a relatively small number) of people care enough about MG Rover to pledge our own hard earned.

Fully agree with your other points though!
 

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Discussion Starter · #18 ·
johnking said:
There may well be good economic reasons to keep the company alive - but it would need to be tightly controlled.
Yep agreed...if the government were to help it would have to be with the aim of getting proper investment very quickly.
 

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Right here is a possible solution, well mine anyway. I know Ford are not in the healthiest of states at the mo but they would make an ideal suitor to MGR. They seem to have a lot of brands in their PAG that they understand (unlike VW!!) and leave them in the main to run themselves, Aston is a case in point oooh and Volvo. Now I know that the K series is a good engine but if they took over MGR they could close down Powertrain (I know not good but hey it might keep several thousand people employed rather than none) in the medium term and replace all engines with Ford units and Pug diesels (good economies of scale) new cars are ready to run allegedly so there imediate investment would be minimal say £300million. Future cars could be based on Ford platforms which are good (you can't really argue), which would give them many thousand more unit sales for their investment in the new platforms, agian economies of scale. There would be the tie up with Rover and Landrover again (good) and a potentially viable business. Any thoughts as LR seem to have done very well under Ford and the SV could be sold in US through their dealer network.
 
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