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other_rover
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Discussion Starter · #1 ·
The more I think about this the more I begin to think SAIC is completly in the driving seat. They now control the destiny of the Rover brand. They own the intellectual property rights to all MGR's key models. The question is what kind of deal can now be done with them to rescue some of Longbridge?

SAIC can if they want buy the production lines off the administrators, Powertrain, along with the MG brand (plus Austin, Morris, Wolseley etc). I'm not even sure if they already control the dealer network or not. Did the dealers sign the new contracts?

But it's not all bad. If SAIC want all this they will need to negotiate with the administrators and the DTI. If they want to keep the dealer network going then they will need to keep production lines so that stock can be built up before any more to China. They also need to win back MGR buyers so they need to keep it "British".

In short in order to make something happen I think they will need to leave some stuff in Longbridge. Perhaps the 75 and the SV and TF. The real question is are SAIC just going to write any investments they have made off. Or will SAIC walk away totally?

If they walk away then the administrators may be able to sell MG to a VW or someone. Eitherway SAIC are in the driving seat. It's their move next!
 

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SAIC can if they want buy the production lines off the administrators, Powertrain, along with the MG brand (plus Austin, Morris, Wolseley etc). I'm not even sure if they already control the dealer network or not. Did the dealers sign the new contracts?

No they can't buy anything off the administrators without PVH's consent. The administrators can only make reccommendations to management.. not take direct action. Powertrain is also not in Administration; neither is any part of the MGR delaer network (including the PVH owned showrooms).

John
 

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mg_6_gt
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Firstly, nobody needs to negotiate with the Department for Trade and Industry - MG Rover Group Limited is a PRIVATE company and has nothing to do with the aformentioned ministry.

Also, nobody knows how much (if any) of MGR's assets SAIC managed to buy from the company before it went into administration. That has yet to be announced by MGR. If SAIC had purchased PowerTrain Limited, how could that company be in administration?
 

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Discussion Starter · #4 ·
JohnSwitzer said:
SAIC can if they want buy the production lines off the administrators, Powertrain, along with the MG brand (plus Austin, Morris, Wolseley etc). I'm not even sure if they already control the dealer network or not. Did the dealers sign the new contracts?

No they can't buy anything off the administrators without PVH's consent. The administrators can only make reccommendations to management.. not take direct action. Powertrain is also not in Administration; neither is any part of the MGR delaer network (including the PVH owned showrooms).

John
Thanks for clearing that up John. I wasn't sure how much of a say PVH still have. So this means that effectively SAIC still have to cut a deal with PVH if they want MGR. That's good to know!
 

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mg_zr
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I think there is a lot of confusion over what SAIC actually bought from MGR/PVH for £67 million.

Personally I think that SAIC bought the rights to just build the K series plus the Rover 75 in China. This doesn't mean that SAIC now own the IP rights to these products. I still think that the IP rights are with PVH or MGR. (Hopefully PVH own them rather than MGR.)
 

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JohnSwitzer said:
SAIC can if they want buy the production lines off the administrators, Powertrain, along with the MG brand (plus Austin, Morris, Wolseley etc). I'm not even sure if they already control the dealer network or not. Did the dealers sign the new contracts?

No they can't buy anything off the administrators without PVH's consent. The administrators can only make reccommendations to management.. not take direct action. Powertrain is also not in Administration; neither is any part of the MGR delaer network (including the PVH owned showrooms).

John
Hang on a minute John - Powertrain are in Administration along with MG Rover.

Phoenix Venture Holdings is not in Administration though.
 

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I reckon the IP for the K-Series, the 25 and the 75 still resides with MGR and not SAIC, otherwise I can't see the Administrators coming up with this statement...
Accountants Price Waterhouse Coopers (PWC) say they are optimistic about trying to salvage parts of the firm, because of "good assets and a great workforce".
 

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Chinese hold veto on Rover asset sales

· Shanghai secures rights to car maker for just £67m

Oliver Morgan, industrial editor
Sunday April 10, 2005
The Observer

The Chinese company that last week spurned a life-saving deal with insolvent MG Rover has an effective veto over the sale of the company's assets by the administrators.

Shanghai Automotive Industry Corporation (SAIC) paid just £67m in the autumn for the intellectual property rights to Rover's Powertrain engine and transmission systems and the firm's flagship R75 saloon/estate and R25 car.

Sources close to SAIC confirmed that should any other company want to buy any of these assets, they could be prevented from exploiting them. This effectively means that for only £67m the corporation has got control of all the assets it wants from Rover, rendering them virtually worthless to anyone else. It could therefore buy them at a price of its choosing and ship them out to China.

A source close to SAIC told The Observer: 'Nobody else can buy it or make it. This applies to Powertrain, the Rover 25 and the Rover 75.' Asked what SAIC's next move would be, the source said: 'We shall see what happens.' He admitted that if the events of the past six months had been a game of cards, the Chinese would have played a near perfect hand.

SAIC sources also claim that the company held no direct negotiations with MG Rover over the past week despite the presence of Rover chairman John Towers and two other company directors in Shanghai. It is understood they talked only to Department of Trade and Industry officials, also present in China. 'This was one of the difficulties,' said a DTI source.

Rover administrator PriceWaterhouseCoopers (PWC) has received a number of expressions of interest in the remaining businesses. But PWC said it would contact SAIC as soon as possible to gauge its interest in the assets (the MG Rover manufacturing business and Powertrain).

Both Gordon Brown and Tony Blair, along with Tony Woodley, Transport and General Workers Union leader, have said they hope a deal to keep MG Rover's Longbridge plant open can still be done with SAIC. Sources close to the Chinese, however, insisted it was too early to tell. They added that the outcome would be determined by how the administrator dealt with the assets.

A PWC source said: 'We have had some people ... express interest. SAIC remain a party with whom we would like to talk. We'll be endeavouring to talk to them as soon as possible.' But, referring to SAIC's holding of the rights, he added: 'That is something we'll have to consider carefully. It makes it quite complicated. If the intellectual property is owned by SAIC it may make it more difficult to sell the assets to anybody else.'

Industry analysts suggested that SAIC had played a clever game in placing an effective veto on the assets through the deal last year. 'They have ... paid that £67m for Powertrain, 25 and 75 intellectual property, so they know how to make engines. What more do they need?'

It has also emerged that the government and Rover were aware of China's concerns over the firm's solvency in the middle of March, when it suspended the process of approving the deal which had been under negotiation since July. On 29 March, the DTI had a letter from SAIC outlining key concerns: the solvency after the deal of Rover parent Phoenix Venture Holdings, pension liabilities, redundancy costs, and the availability of finance facilities.

A Rover spokesman said the firm had done all it could. 'It was never a case of the Chinese not talking,' he said.
 

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Sounds to me like they've been screwed over. I will never buy an SA*C produced car, in the same way that I will never buy a B*W.
 

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rw9zt said:
Sounds to me like they've been screwed over. I will never buy an SA*C produced car, in the same way that I will never buy a B*W.



My hunch is that they have a share in the IP rights. As the complete deal did not go through, perhaps PVH could nullify the whole thing. Of course they would need to return SAIC's money. BTW. Are SAIC executives that cunning that they could have planned (Unbeknownst to PVH) this outcome all along??
 

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Maybe SAIC only own the IP rights to the current K-series, and not it's Euro-IV compliant successor. Same with the 75. Perhaps they only own the IP of the current version and not the much rumoured heavily revised version?
 

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The problem is we don't know, so we can't assume they are the IP rights. Personally I'd have thought they were the Production rights. After all, they weren't going to produce our 75, but a modified 75 for them.
 

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iaan said:
Shanghai Automotive Industry Corporation (SAIC) paid just £67m in the autumn for the intellectual property rights to Rover's Powertrain engine and transmission systems and the firm's flagship R75 saloon/estate and R25 car.
guess the test will be how the courts interpret IP rights over the Rover 75 etc. After all the MG ZT is a different beast even if it is related....
 

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It sounds like a right old game of cat and mouse!

Have SAIC waited for MGR to go over the brink (it was inevitable if a deal was not done) and hope to pickup what it wants for a knock down sum?

Or did PVH sell SAIC the IP to the current 'old' designs (engines and cars) and keep the new designs to themselves. (Euro IV K series, L series replacement, 45 replacement etc)?

Will the shrewed British businessman outwit the inscrutable Chinaman?

Watch this space!
 

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Let's hope so.

But what if these 'intellectual rights' and IP were actually nothinng more than licensing? Now that would have been a smart John Towers move.

Somehow though, I worry that this is not the case, and Rover may have been shafted by a large overseas concern (again :cus: ) that has no interest in this country or its workforce.
 

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SAIC are welcome to the 45/25 lines - MGR would be in cloud cuckoo land if they think that they can compete in Europe with such low levels of automation, though I suspect they still have a use in a low wage economy like China. This is a bargaining point that PwC shouldn't miss - it would be prohibitively expensive for SAIC to invest money in new lines with 1980s technology.

MGR must not let the 75 lines go - there is still a hope of continuing production of the ZT (and RD60) on these lines.

Do we need the K series anymore? They can have that also as long as we have a "ready to go" new K series.

I think in reality MGR haven't lost too much - the Rover name is licensed from BMW and has suffered so much derision from the press that it's worth little in its own country and biggest market. What they have lost is a piece of the action in China, which is a massive new market (100s of millions of cars over the next five years), so plan B is a small producer of Euro standard cars.
 

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Derrin said:
Do we need the K series anymore? They can have that also as long as we have a "ready to go" new K series.

I think in reality MGR haven't lost too much - the Rover name is licensed from BMW and has suffered so much derision from the press that it's worth little in its own country and biggest market. What they have lost is a piece of the action in China, which is a massive new market (100s of millions of cars over the next five years), so plan B is a small producer of Euro standard cars.
Sorry to pour more cold water on this but having spent years negotiating IPRs SAIC will have built in lots of options that in the event of MGR dying they will have first option to buy full ownership of the IPRs, plus the ownership would include all existing and new developments. Why would SAIC setlle for less? By all accounts the engine factory was doomed anyway even if the deal was signed. I suspect they might run it to keep Ford happy until the K series is scrapped next year in Land overs.

MGR had no option but to concede as there were no other options.

SAIC are crowing that they own Rovers IPRs and indeed they probably do as nobody else is likely to bid for them. What SAIC do need are the design staff and I suspect that later in the week they'll do a swoop for them. So SAIC (like Daewoo) will do their design work in Europe. For a period.
 

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Discussion Starter · #20 ·
Don't panic guys. There are still some tricky realities for SAIC to overcome. Firstly they must maintain the dealer network whilst any production is moved to China. In order to do this they will have to keep the dealers happy by supplying cars. In order to supply cars production must resume and stock must be built up.

Secondly the administrators still have MG and hopefully all the future designs, and they are still in control of the engineering dept. In order for SAIC to do anything then they must get the right to the RD60 and they must have a pool of engineers skilled enough to finish it.

In my view SAIC will end up doing a deal to make the TF and SV in the UK with one other car (perhaps the 75). Longbridge will probably end up being about the size of the Peugeot plant in Ryton but will hopefully retain the MG sportscars and 75 production.....(I hope)


Does this hold water? :err:
 
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