Here is the front page article in this mornings Guardian!! I hope Kevin Howe and Co. Respond to this, because I think it is vicious and full of half truths or malicious innuendo. Personally If MG-R and PVH prosper, then Mr Howe and Co. deserve to get amply rewarded. I say good luck to them. This kind of irresponsible reporting is designed purely to foment unrest and dissension within the workforce who understandably must be worried about their jobs. Call me naive but I think these men will definitely see that the workforce will also share in some of this wealth if the company turns around. IMHO MG-R has just turned the corner toward prosperity. The forthcoming Vitesse V8 and the revised 45/ZS will serve notice to all the naysayers that MG-R is well and truly back.
Ian Griffiths and David Gow - Tuesday March 2, 2004 - The Guardian.
The four men credited with saving MG Rover have dismantled the group and created a private empire, an investigation by the Guardian reveals.
Through a complex financial restructuring, the core Rover car business, which is still making huge losses, has been isolated from a number of profitable associate businesses.
The result is that if Rover were to fall victim to the ferociously competitive pressures of the volume car manufacturing, costing thousands of jobs in the Midlands, those who organised the purchase of the business from £10 from BMW four years ago would stand to walk away with more than £100m between them.
The company disputes the contention that the Rover group has been structured for the benefit of the four owners of the Phoenix consortium which rescued MG Rover, and absolutely rejects any notion of asset stripping. However, analysis of the new structure reveals that John Towers, Nick Stephenson, John Edwards and Peter Beale will be at least £70m richer between them if Britain's last independent volume car maker is forced to close. This is on top of the £31m in fees and other benefits the Phoenix directors have already received from the group.
Specific assets which now rest beyond the reach of Longbridge's 5,000 car and Powertrain workers and MG Rover dealers, who were granted shares in the rescued business, include:
· The Powertrain engine business, worth at least £50m, which supplies Land Rover, Lotus and Caterham cars, as well as Rover.
· Studley Castle, a Warwickshire mansion formerly used as a Rover training centre, worth more than £2m.
· MGR Capital, a car loan business, and two other leasing businesses, worth about £24m.
On top of this, the Guardian's analysis also shows that the promised development of a new MG sports model is now being undertaken away from the core Rover business, while the company's spare parts business has also been restructured.
Phoenix said last night that the deals involving Powertrain and the Rover parts business "have both resulted in major benefits to MG Rover". It added that smaller acquisitions by Phoenix were "either no cost or low cost, with no material profit stream for use anywhere in the group".
A collapse in sales towards the end of last year has triggered fears in Whitehall that MG Rover, deprived of new models, including the long-promised make-or-break new medium car, could go under in a competitive car market.
An analysis of the corporate restructuring orchestrated by the Phoenix four suggests there has been a systematic realignment of businesses, once integral to the old Rover group, which ensures economic benefit flows directly to the master company controlled by John Towers, Nick Stephenson, John Edwards and Peter Beale, rather than MG Rover itself.
Phoenix Venture Holdings has spent millions buying businesses which have taken the master company directly into financial services and the property market. In the West Midlands, a politically sensitive region where marginal seats change hands regularly, there is a growing sentiment that Rover has been betrayed by the four men who promised its salvation and have since presided over dwindling sales, continuing losses and a gradual erosion of the workforce to little more than 4,000 in the car plant.
Messrs Towers, Stephenson, Edwards and Beale were feted as heroes when their Phoenix consortium bought MG Rover with a promise to save some 8,000 jobs and preserve independent volume car production in Britain. The consortium eventually won the backing of a government anxious to preserve up to 20,000 more jobs in the Midlands components industry a year ahead of the 2001 general election.
The Phoenix four gave shares to car workers and dealers allowing them to participate in the promised recovery of the struggling MG Rover business. But the shares, representing 50% of the firm, which the workers and dealers own in Phoenix Venture Holdings (PVH), the master company which owns MG Rover, are of much less value than the shares in the same company owned by the car company's four saviours.
The equity owned by workers and dealers can only share in dividends or assets directly associated with the car company. Those shares receive no benefit in the other, more profitable, businesses which Phoenix has acquired or created over the last three years.
The car company has lost over £500m since its new owners took control, and has deferred any prospect of breaking even until 2005 at the earliest. In the 2002 report to shareholders, Kevin Howe, chief executive, warned of MG Rover: "It does remain a significant cash drain on the overall group and must make a breakthrough into profitability in the near- term." He also suggested that PVH was pursuing a strategy which was not driven solely by MG Rover. "We have moved from consolidation to being a much broader church with several independent subsidiaries working towards generating increasing levels of contribution to PVH."
Mr Howe concluded: "PVH will continue to find new and innovative ways of generating much needed profit and cash for our group as a whole."
But, while the group as a whole may benefit, the bulk of shareholders will not. If the four men who control PVH decide to close Longbridge and withdraw from volume car production, they will be left with a Phoenix business estimated to be worth at least £70m. That £70m would be on top of the £31m that the Phoenix four and chief executive Kevin Howe have already shared by way of salaries, payments into trust funds and other rewards.
Despite the heavy losses at MG Rover and its investment in new businesses PVH has retained a healthy cash position. The 2002 report to shareholders reveals that PVH had cash balances of £315m at the end of that year.
The company has been helped by the £1.1bn dowry which BMW made available to the Phoenix consortium as part of the deal allowing the German car maker to escape from its disastrous venture into the UK volume market.
BMW has provided £427m of cash by way of an interest-free loan, repayable in 2049. It also handed to Phoenix at least 40,000 cars it had made but not sold with a value of around £400m.
The Powertrain engines business, worth more than £100m and now turning over £200m, was also handed over by BMW in 2001. The German company also subscribed for over £200m of MG Rover equity as part of the disposal of that business.
Questions are now being asked about how PVH has cho sen to distribute the BMW dowry. Some industry analysts are concerned that cash has been conserved to prop up day-to-day operations rather than invested in the development of the new medium-sized model regarded as central to MG Rover's long-term survival.
MG Rover says: "The major acquisitions of Powertrain and XPart have both resulted in major benefits to MG Rover. Smaller acquisitions, eg Studley Castle and Phoenix Distribution, are either no cost or low cost with no material profit stream for use anywhere in the group."
Rover accepts that some of the £427m loan note has been used to finance the company's losses but argues the cash has also been used to make significant investments in new products.
However, the new medium-sized model has still not been developed and is not expected until late 2005. Some analysts and industry sources fear it may never be built.
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BTW!! I think the MG Sportscar they are refering to is the "SV XPOWER" What Idiots!! Because of the unique nature of this car and it's construction MG-R realized that it would be faster to develop this car with a small team of engineers and designers seperate from the more mainstream developments. That is how companies like Lotus, are able to develop and design complete vehicles, productionize them and bring them market much faster than say a monolithic company like GM or even MG-R.
I'm not sure if MG-R are actually planning to show the revised 45/ZS at the Geneva Auto Show. If not, I'm sure they would have scheduled (what is sure to be an important car until RD/X60 arrives) it to be there, had they known they were going to be blindsided by this article on the day that the show is due to open. If the revisions are as great as we have been led to believe, as it would have totally taken the wind out of Messrs. Griffith and Gow's sails. They are obviously (for reasons only they know) trying to take the wind out of ROVER'S SALES!!!!!:irked: :irked: :irked: :irked:
Ian Griffiths and David Gow - Tuesday March 2, 2004 - The Guardian.
The four men credited with saving MG Rover have dismantled the group and created a private empire, an investigation by the Guardian reveals.
Through a complex financial restructuring, the core Rover car business, which is still making huge losses, has been isolated from a number of profitable associate businesses.
The result is that if Rover were to fall victim to the ferociously competitive pressures of the volume car manufacturing, costing thousands of jobs in the Midlands, those who organised the purchase of the business from £10 from BMW four years ago would stand to walk away with more than £100m between them.
The company disputes the contention that the Rover group has been structured for the benefit of the four owners of the Phoenix consortium which rescued MG Rover, and absolutely rejects any notion of asset stripping. However, analysis of the new structure reveals that John Towers, Nick Stephenson, John Edwards and Peter Beale will be at least £70m richer between them if Britain's last independent volume car maker is forced to close. This is on top of the £31m in fees and other benefits the Phoenix directors have already received from the group.
Specific assets which now rest beyond the reach of Longbridge's 5,000 car and Powertrain workers and MG Rover dealers, who were granted shares in the rescued business, include:
· The Powertrain engine business, worth at least £50m, which supplies Land Rover, Lotus and Caterham cars, as well as Rover.
· Studley Castle, a Warwickshire mansion formerly used as a Rover training centre, worth more than £2m.
· MGR Capital, a car loan business, and two other leasing businesses, worth about £24m.
On top of this, the Guardian's analysis also shows that the promised development of a new MG sports model is now being undertaken away from the core Rover business, while the company's spare parts business has also been restructured.
Phoenix said last night that the deals involving Powertrain and the Rover parts business "have both resulted in major benefits to MG Rover". It added that smaller acquisitions by Phoenix were "either no cost or low cost, with no material profit stream for use anywhere in the group".
A collapse in sales towards the end of last year has triggered fears in Whitehall that MG Rover, deprived of new models, including the long-promised make-or-break new medium car, could go under in a competitive car market.
An analysis of the corporate restructuring orchestrated by the Phoenix four suggests there has been a systematic realignment of businesses, once integral to the old Rover group, which ensures economic benefit flows directly to the master company controlled by John Towers, Nick Stephenson, John Edwards and Peter Beale, rather than MG Rover itself.
Phoenix Venture Holdings has spent millions buying businesses which have taken the master company directly into financial services and the property market. In the West Midlands, a politically sensitive region where marginal seats change hands regularly, there is a growing sentiment that Rover has been betrayed by the four men who promised its salvation and have since presided over dwindling sales, continuing losses and a gradual erosion of the workforce to little more than 4,000 in the car plant.
Messrs Towers, Stephenson, Edwards and Beale were feted as heroes when their Phoenix consortium bought MG Rover with a promise to save some 8,000 jobs and preserve independent volume car production in Britain. The consortium eventually won the backing of a government anxious to preserve up to 20,000 more jobs in the Midlands components industry a year ahead of the 2001 general election.
The Phoenix four gave shares to car workers and dealers allowing them to participate in the promised recovery of the struggling MG Rover business. But the shares, representing 50% of the firm, which the workers and dealers own in Phoenix Venture Holdings (PVH), the master company which owns MG Rover, are of much less value than the shares in the same company owned by the car company's four saviours.
The equity owned by workers and dealers can only share in dividends or assets directly associated with the car company. Those shares receive no benefit in the other, more profitable, businesses which Phoenix has acquired or created over the last three years.
The car company has lost over £500m since its new owners took control, and has deferred any prospect of breaking even until 2005 at the earliest. In the 2002 report to shareholders, Kevin Howe, chief executive, warned of MG Rover: "It does remain a significant cash drain on the overall group and must make a breakthrough into profitability in the near- term." He also suggested that PVH was pursuing a strategy which was not driven solely by MG Rover. "We have moved from consolidation to being a much broader church with several independent subsidiaries working towards generating increasing levels of contribution to PVH."
Mr Howe concluded: "PVH will continue to find new and innovative ways of generating much needed profit and cash for our group as a whole."
But, while the group as a whole may benefit, the bulk of shareholders will not. If the four men who control PVH decide to close Longbridge and withdraw from volume car production, they will be left with a Phoenix business estimated to be worth at least £70m. That £70m would be on top of the £31m that the Phoenix four and chief executive Kevin Howe have already shared by way of salaries, payments into trust funds and other rewards.
Despite the heavy losses at MG Rover and its investment in new businesses PVH has retained a healthy cash position. The 2002 report to shareholders reveals that PVH had cash balances of £315m at the end of that year.
The company has been helped by the £1.1bn dowry which BMW made available to the Phoenix consortium as part of the deal allowing the German car maker to escape from its disastrous venture into the UK volume market.
BMW has provided £427m of cash by way of an interest-free loan, repayable in 2049. It also handed to Phoenix at least 40,000 cars it had made but not sold with a value of around £400m.
The Powertrain engines business, worth more than £100m and now turning over £200m, was also handed over by BMW in 2001. The German company also subscribed for over £200m of MG Rover equity as part of the disposal of that business.
Questions are now being asked about how PVH has cho sen to distribute the BMW dowry. Some industry analysts are concerned that cash has been conserved to prop up day-to-day operations rather than invested in the development of the new medium-sized model regarded as central to MG Rover's long-term survival.
MG Rover says: "The major acquisitions of Powertrain and XPart have both resulted in major benefits to MG Rover. Smaller acquisitions, eg Studley Castle and Phoenix Distribution, are either no cost or low cost with no material profit stream for use anywhere in the group."
Rover accepts that some of the £427m loan note has been used to finance the company's losses but argues the cash has also been used to make significant investments in new products.
However, the new medium-sized model has still not been developed and is not expected until late 2005. Some analysts and industry sources fear it may never be built.
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BTW!! I think the MG Sportscar they are refering to is the "SV XPOWER" What Idiots!! Because of the unique nature of this car and it's construction MG-R realized that it would be faster to develop this car with a small team of engineers and designers seperate from the more mainstream developments. That is how companies like Lotus, are able to develop and design complete vehicles, productionize them and bring them market much faster than say a monolithic company like GM or even MG-R.
I'm not sure if MG-R are actually planning to show the revised 45/ZS at the Geneva Auto Show. If not, I'm sure they would have scheduled (what is sure to be an important car until RD/X60 arrives) it to be there, had they known they were going to be blindsided by this article on the day that the show is due to open. If the revisions are as great as we have been led to believe, as it would have totally taken the wind out of Messrs. Griffith and Gow's sails. They are obviously (for reasons only they know) trying to take the wind out of ROVER'S SALES!!!!!:irked: :irked: :irked: :irked:
