Press Report : MGR’s Phoenix Four facing legal action for £22m

Jon Walker, Birmingham Post, 4th November, 2009

The Government has offered to back legal action forcing former Rover Directors to hand over up to £22 million to former employees and community projects. Business Minister Ian Lucas told the House of Commons he would do “anything I can do” to help local people obtain the money.

The assets are tied up in a business called MGR Capital, which is owned by the four Rover Directors in a joint venture with bank HBOS. The Directors, John Towers, Nick Stephenson, John Edwards and Peter Beale, have promised to donate any assets from their business Phoenix Venture Holdings – which owned MG Rover – to a trust fund for former Rover staff but the assets of MGR Capital are not included in this pledge, because it is not part of the Phoenix group.

I say to the Phoenix consortium, put part of your share of MGR Capital’s profits towards the trust fund for your former employees and the rest of it in to a community development trust so that local people can have a direct say and a direct benefit into the redevelopment of the Longbridge site and the surrounding area.” Richard Burden MP (Lab. Northfield)

Instead, it is owned by the four Directors, along with former MG Rover Chief Executive Kevin Howe, and the bank. It bought Rover’s loan book from BMW in 2001. A detailed report published in September by Government Inspectors found that the Directors stand to make £3.2 million each from MGR Capital, while Mr Howe stands to make £1.4 million.

However, the four Directors and Kevin Howe now face demands that they donate the cash to a long-awaited trust fund for workers who lost their jobs when the Birmingham-based carmaker collapsed in 2005. Speaking in a Commons debate, MP Richard Burden (Lab. Northfield), whose constituency includes the site of the former Rover plant at Longbridge, said: “There are reports that there could be proceeds in there of something between £16 million and £22 million.

“My understanding of the structure of the company is that this could just be shared between HBOS and members of the Phoenix consortium personally. I say no to that. Let the proceeds of MGR Capital be at least one positive legacy of the Phoenix years. I say to the Phoenix consortium, put part of your share of MGR Capital’s profits towards the trust fund for your former employees and the rest of it in to a community development trust so that local people can have a direct say and a direct benefit into the redevelopment of the Longbridge site and the surrounding area.”

They invested their own money in 2001, and took out an extremely large loan from HBOS. They took a risk, as this was a loss-making business at the time. They turned it into a profitable company.” A spokesman for the  Directors of Phoenix Venture Holdings Limited

Business Minister Ian Lucas, responding to the debate for the Government, told him: “That is a moral obligation and I say to my honourable friend that anything I can do in terms of both that moral obligation and exploring whether there is any formal legal obligation involved which would enable action to be taken, I would support too, on his behalf and on behalf of his constituents in the West Midlands.”

However, a spokesman for the Phoenix Directors appeared to rule out and handover of the cash. He said: “They invested their own money in 2001, and took out an extremely large loan from HBOS. They took a risk, as this was a loss-making business at the time. They turned it into a profitable company.” The spokesman said the intention was still to donate assets from Phoenix Venture Holdings to the workers’ trust fund, once that business was wound up.

[Source: Birmingham Post]

Posted in: AROnline News, MG Rover
Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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