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Martyn Moseley starts his battle to buy back MG Rover
Thursday 28th July: Martyn Moseley, who tabled a failed £90m bid for MG Rover, is seeking to buy back MG Rover from its new owners, Nanjing Automobile. In the proposed deal, Mr Moseley would pay Nanjing the £53m it paid for MG Rover's assets, but provide the Rover 45 line to be shipped to China. Mr Moseley would then re-start car production at Longbridge. As part of the deal, revealed in today's Financial Times, Mr Moseley would also set up a £40m fund for MG Rover's suppliers who lost money following the company's collapse.
It is too early to tell whether Nanjing would consider this proposal seriously: the sale of Longbridge would thwart their ambitions to become a global player in the Automotive market, plus access to the R25 and R75 production lines would be lost under the conditions laid out by Mr Moseley. However, whether the two parties can thrash out an agreement remains to be seen; clearly negotiations are going to prove to be hard work.
More rumblings regarding PwC's sale of MG Rover
It would appear that it isn't only SAIC who are upset about the way that the sale of MG Rover was eventually executed: Martyn Moseley isn't happy either. Mr Moseley points out that his £90m bid was more valuable than Nanjing's. Moreover, PwC had "deliberately made impossible demands for cash in seven days, then followed up by ignoring his proof of funds." According to Mr Moseley, "PwC have been saying all the way through 'show us the money.' As far as I know they have done this deal with Nanjing based on a credit note. They wouldn't accept that off anybody else."
He said his lawyers had a legal challenge to the sale prepared, but he was waiting to see if public pressure forced PwC to reverse its position. Given recent statements from PwC, there appears to be little chance of that happening.
SAIC and Magma continue to search for a British base of operations
In the mean time, SAIC continue to harbour ambitions to build a European base of operations on which to build their world wide ambitions. Maintaining their collaboration with Martin Leach's Magma, the company may seek an alternative base in the United Kingdom. Options may become available include Jaguar's Brown's Lane, or the former Rootes factory in Ryton, now owned by Peugeot (but faces an uncertain future as the 206 model is phased out). What this means for their MG Rover ambitions remains unclear - but SAIC have stated that they will robustly defend their alledged ownership of IPR for the 25 and 75 models.
Nanjing Seek New Management Team for Longbridge
Wednesday 27th July: As the shock waves of last Friday's announcement that Nanjing Automobile had successfully purchased MG Rover continue to reverberate, Nanjing has commenced work on starting recruitment for a UK-based management team to develop the MG brand in the UK. This comes as the inevitable measures are taken to ship out the Powertrain K-series production lines (as well as the production line for the Rover 25/ MG ZR) to China. Amongst those approached are some of the rival teams in the bidding for MG Rover or Powertrain, including Fraser Welford-Winton, the former head of Powertrain Ltd, and head of the so-called "Powertrain" bid, and David James (who remains "very interested" in purchasing the MG sports car arm from Nanjing, should the company wish to sell). According to Autowired, a Nanjing spokesman said: "we are talking to a number of senior players with experience in this industry with a view to recruitment. We are looking for the right team and the right partners." Commenting on a report in the Financial Times that it has already offered stakes in MG Rover to other companies, the spokesman said that was not a priority. "We are talking to people and if something comes out of it we would be foolish to ignore it."
However, rumours from London-based financial institutions suggest that Nanjing may be forced to sell their UK arm - or even may be incapable of completing on the deal signed with PwC. Nanjing insists that the money for its £50m bid has been in a UK bank for some time and is ready to be transferred - so the deal will take place. But whether the company, a tenth of the size of its rival, SAIC, can raise the capital to kick-start Longbridge back into life - a process that could require tens of millions of pounds - remains to be seen. Nanjing appear to be taking pains to make clear that they do see a future for Longbridge - and aim to meet with Unions and other interested bodies in an attempt to allay fears that the oft predicted "Strip and Ship" operation is about to take place.
David James vows to fight on
Monday 24th July: If the sale of MG Rover has appeared convoluted so far, there are no signs yet that there is going to be a simple ending. In the Independent today, Project Kimber leader, David James, is to submit a new, £65m offer for MG Rover despite PwC having announced on Friday that Nanjing Auto had won the auction. The paper reports that Mr James is 'furious' that PwC chose Nanjing while he was still finalising a new, larger bid for the whole of MG Rover Group. Mr James said: "We told them [PwC] we were coming back on Monday with our offer and we were very shocked by Friday's announcement. We are putting in our bid regardless." However, PwC have indicated little sympathy with either Project Kimber or SAIC's plight: all the bidders had three and a half months in which to table a bid and only Nanjing were capable of sealing the bid within the period; it appears that this move by Project Kimber is unlikely to alter the outcome announced on Friday evening. Unless, that is, Nanjing have some hitch in providing the necessary funds to complete the deal.
Nanjing may offer a face-saving collaborative venture
Despite all the wranglings since Friday's announcement, SAIC and Project Kimber may yet have the facility to collaborate with the new owners of MG Rover and have a say in the future running of MG. In an interview with the Shanghai-based Oriental Morning Post, Nanjing spokesman Liu Ningsheng said the win came as something of a surprise to all at Nanjing Automobile.
"We are surprised by the successful acquisition of Rover. The price of the acquisition is a bit more than £50m," Liu told the paper. "We welcome cooperation of both domestic and foreign capital to establish a holding company including SAIC and we could even consider giving up our majority rights in the company." Whether this statement is designed purely to pour oil onto troubled waters, or is a genuine attempt to build bridges with competitors threatening legal action is not clear, but clearly, the weeks ahead could yet throw up some more surprises - not least the potential for a sale of MG to a third party.
SAIC may seek to contest PwC's decision to sell to Nanjing
Monday 24th July: In the Telegraph today reports that SAIC is threatening a legal challenge to the decision by PwC, MG Rover's administrator, to sell the company to rival Nanjing Automobile. An executive close to SAIC is quoted as saying that the company was considering legal action as it did not believe that PwC had carried out the disposal fairly. The source said: "We are looking at all our options, including legal options, because we do not think the sales process was conducted properly," he said. "We have been working on this for a long time and we put a higher offer on the table than they did. We are not going to leave this lying."
A source "close to" SAIC for the Observer was consistent with this line, saying: "We have already spent £67m buying the intellectual property rights to MG Rover, and do not want to see that investment wasted. We have a substantial stake already on the table."
Indeed, the news has not gained universal praise from other quarters either. Tony Woodley of the T&G Union (and a supporter of the rival SAIC/Magma bid) gave the news a cool reception. Mr Woodley was quoted in both the Observer and the Independent as saying, "the best thing for China, Britain, and British jobs is for both Chinese companies to collaborate and I will be working exhaustively for this. Nanjing don't have the management to run a car company outside China. I think that they should contact Leach and SAIC with a view to a joint venture." Perhaps Mr. Woodley's scepticism regarding Nanjing's ability to manage its UK subsidary is well founded - and perhaps already appreciated by Nanjing themselves: the Telegraph reports that Nanjing is this week preparing to start talks with potential UK-based partners, thought to include Alchemy Partners, the venture capital firm, and David James, about creating a joint venture to restart production of MG sports cars in the Midlands. And there is also the possibility that Martin Leach may yet be involved in the new MG car company: sources close to Magma are said to have indicated that Mr Leach may approach Nanjing in the coming weeks regarding MG Rover, according to today's Guardian newspaper. The Independent quotes Mr Leach as saying: "I am naturally disappointed. I believe we put in a credible bid backed up by a sustainable business plan that would have been highly beneficial for the UK.
"We will watch developments with great interest and, in the meantime, will continue with our search for underperforming businesses in the automotive sector."
And the future for Longbridge? At this stage, the answer to that question is unclear. Whether the new Nanjing-owned MG Car company would remain at the 100 year old production plant remains to be seen; the land is owned and leased back to MG Rover, by Property Developers, St. Modwen. It is entirely possible that all UK production could therefore be shifted to a new, purpose built facility somewhere else in the Midlands - a decision that is likely to be influenced by the prevailing economics.
NANJING WIN THE BATTLE TO BUY MG ROVER!
Saturday 23rd July: Nanjing Automobile Corporation, China's oldest car manufacturer, have succeeded in beating their chinese rivals, SAIC, in securing the purchase of both MG Rover Group Ltd and Powertrain Ltd. The plan for MG Rover is expected to be fleshed out over the coming weeks, but the outline has been outlined earlier in News - essentially it involves shipping small and medium car production to China (and perhaps badged as Austins), whilst retaining luxuary and sports car production here in the UK (with projected output in the range of 80-100,000 units per anum - consisting predominantly of MGs for European consumption). Powertrain (definitely K-series petrol, but L-series diesel we don't yet know about) production lines will be shipped out to China. The UK operation will (hopefully) then be expected to become a Research and Development site for Nanjing's international aspirations - which would, presumably, be set up in conjunction and assistance with UK-based engineering consulantancy, ARUP, who assisted Nanjing in their bid for MG Rover.
Of course, this decision does leave some loose ends untied - not least SAIC's supposed ownership of IPR for the 25, 75 and also TF. It remains to be seen whether an amicable arrangement can be reached between the two former Joint Venture partners. What any potential legal delay would mean for Longbridge is an open question.
Full PwC Press release:
The joint administrators from PricewaterhouseCoopers have announced the sale of the assets of both MG Rover Group and its engine producer, Powertrain Limited to Nanjing Automobile (Group) Corporation. The sale concludes a three month process following the collapse of MG Rover in early April. Nanjing Automobile (Group) Corporation was one of the two Chinese groups that had planned to become joint venture partners with Phoenix Ventures, prior to the collapse of negotiations.
Tony Lomas, joint administrator, said: "In early June I reported to the creditors that there were no viable bidders for the business as a going concern. As a result, plans had been put in place for a break-up sale, unless a bidder pre-empted that process before it could be completed. SAIC had offered to buy the engine plant for relocation to China, so negotiations were underway to sell those assets separately.
"Whilst we have been negotiating with Nanjing Automobile (Group) Corporation we have been aware of Martin Leachıs interest in the car production assets, although no bid has ever been made by Mr Leach.
"Until late last week SAIC had offered to acquire only the Powertrain assets. On Monday of this week SAIC submitted a conditional bid for all of the MG Rover and Powertrain assets. However the level and conditionality of SAIC's bid left Nanjing's bid as the preferred way forward.
"Nanjing will now begin to take control of the assets and develop its plans for the future. It has indicated its intention to relocate the engine plant and some of the car production plant to China, to retain some car production plant in the UK and to develop an R&D and technical facility here in pursuit of the same global expansion ambition that it had when it joined with SAIC as the intended joint venture partners to Phoenix Venture Holdings before the collapse of MG Rover.
"For a transition period a residual workforce will continue to be employed by MG Rover Group and Powertrain, assisting the Administrators as they have for the last three and a half months. In the meantime Nanjing Automobile (Group) Corporation intends to begin to hire staff to assist it in implementing and developing its strategy.
Notes to Editors:Project Kimber Press Release
Friday 22nd July:
David James submits a slimmed down bid for just MG
What would the project Kimber product line look like? In the four images below, David James' team have outlined a future potential MG product range, stretching from a new MG Midget (inspired by the Smart Roadster, as pictured below, left, through a re-styled MG TF (possibly to be renamed MGB?), shown in the top two images, and extending through to a 'flagship model' that would challenge the likes of the Porsche Boxster. Projected sales are optimistic - in part due to a business plan that would see the early re-entry of the MG marque back into the North American car market. Money too tight to mention for the Chinese? The other British Bid? Bid Summary: Magma/SAIC Fail to deliver "knockout deal" * The full-funding of the bid for MG-Rover represents a dramatic U-turn for SAIC, who in April refused to consider purchasing MG Rover from the administrators. Furthermore, as part of the colaboration with Magma, SAIC had made clear that they were not interested in taking an equity stake in the Longbridge operation. However, recent events have forced SAIC hand: the PwC deadline has been cited as the reason why SAIC have undertaken full funding of their bid. But what does this mean for Magma and Martin Leach? Whilst a letter of intent has been signed, there is as yet no strategic agreement in place - which potentially could leave the British group out in the cold. Moreover, as the SAIC press release appears to indicate, Magma may not have played a significant part in the formulation of the presentation of the bid to PwC. The future direction of this bid therefore remains somewhat unclear.
Thursday 21st July: Up until now, David James and Project Kimber had been planning to purchase the whole of MG Rover and Powertrain - as demanded by the administrator, PwC. However, since the failure to do a deal with SAIC to sell Powertrain and the failure to secure a £80m loan guarantee from the UK Government, Mr James' bidding strategy has changed course. Mr James now does have the required financial backing - thought to be from Robert Tchenquiz (owner of the Whyte & McKay whisky company, Pubmaster chain and Yates' Wine Lodge) - and has now put his deal on the table. From an all-encompassing bid, Project Kimber is now only seeking to purchase the MG sports car making arm of the company - for a dramatically lower price of £15m. Mr James may actually have put more than one bid on the table - a second, reported in today's Times, appears to indicate that there is another bid for both MG and Powertrain of £45m. The remaining assets of MG Rover - the production lines, equipment and Research and Development, Mr James values at around £60m - which the Project Kimber team would expect PwC to sell on. Based on this piece-meal sell off, PwC could appear to realise a significantly great worth from the sale of MG Rover than sale of the entire group to one of the Chinese bidders.
Unfortunately, the bid was submitted after yesterday's 5pm deadline - Mr Lomas has promised to look at the bid this morning, but whether this puts him in a good mind to consider a bid that fails to take on all the assets of MG Rover Ltd and Powertrain Ltd, remains to be seen.
Wednesday 20th July: The day that David James is due to table his bid for MG Rover comes as it becomes apparent that the Chinese finance for their two respective circa £50m bids for the company are not fully financed. As mentioned in News, 12th July, the Chinese central government is very restrictive in terms of money leaving the Chinese economy. This regulation is thought to have impacted upon the bids placed by both Nanjing and SAIC with the administrator, PwC. Consequently, both companies have asked whether the administrator would accept a delayed payment if either of their bids were successful. However, PwC is understood to want the full value of the winning bid transferred on signature of contract.
Compounding the Chinese groups' misery is the apparent failure of either company to secure bridging finance from the City of London. While the reasons for this failure remain unclear, it does mean that the door has been left open for another bid to secure a deal, assuming that it is fully financed and ready to pay. This could be good news for the British based protagonists in this increasingly heated bidding war (that has already seen Nanjing increase their bid from £40m to £50m to counter the bid placed by their Chinese rivals, SAIC).
Tuesday 19th July: Whilst the media continues to concentrate upon the "Big Three," the MG Rover enthusiasts site (www.MG-Rover.org) have been in contact with the Triple A/ Moseley consortium (read more here), and have unveiled a business plan that could see the revival not only for Rover and MG, but of many of the heritage brands such as Austin, Morris and Wolseley. With American and Arabian backing (AMAR), and investment too from Tiawan, the inward investment into Longbridge could dwarf proposals submitted so far by Nanjing and Magma/SIAC.
Writing for MG-Rover.org, John Switzer quotes a source close to Longbridge as saying: "When the detail of the Triple A bid was first revealed, it is fair to say there was some scepticism as to whether they would be able to deliver the goods, in terms of a feasible business plan and the finance required. However, it is now evident that there is a coherent business plan in place, together with the necessary finance to be able to deliver it. The resources that Triple A have access to are truly mind boggling. We're not talking hundreds of millions, but potentially billions."
Almost in direct inverse proportion to the apparent size and scope of this plan is the amount of media exposure this bid has so far received. What reporting there has been (for example, in the Financial Times), has suggested that Triple A was rejected at the same time as Nikolaj Smolenski, and that Martyn Moseley's bid hadn't been rejected as such, but wasn't under consideration by PwC. Which would rather suggest that this whole scenario is a non-starter. However, if the report that a combined bid was submitted last week is correct, we could be looking at the "British Contender" mentioned in Tony Lomas' press release of last week - and a bid that might just surprise everyone predicting a Chinese "take away."
Tuesday 19th July: The clock is ticking down to the anticipated crescendo of the bidding war for MG Rover and Powertrain Ltd; tomorrow (Wednesday 20th) is the date that has been widely speculated to be the day that PricewaterhouseCoopers (PwC) will announce who the preferred bidder for the company is to be. Tony Lomas last week announced that there were three credible bids on the table last week - two foreign and one British. These are thought to be Nanjing Automobile Corporation, Magma/SAIC and David James' Project Kimber.
Nanjing Automobile Corporation, in colaboration with the British Engineering compancy Arup, are thought to have tabled their sub-£50m bid last week - the proposal would involve keeping some research and development here in the UK, along with production of high value products, such as the MG TF and the Rover 75-based vehicles. The small car production lines (Rover 25 and 45) would be shipped to China, although complete Knock down Kits may be imported from China to the UK for assembly at Longbridge for the European market. The deal is thought to represent a UK labour force of approximately 2000.
In contrast, David James has yet to table his bid - and has failed to secure financial guarantees from the Government. However, he has gained support of a major financier - the identity of whom is currently unknown. But this hasn't prevented the press from speculating that it could be none other than Jon Moulton, of the Venture Capitalists, Alchemy. Quoted in today's Guardian newspaper, Jon Moulton did little to dampen that speculation: "I would have said if [there's a] government guarantee of course we'd do it. [But] there's no reason that one will be forthcoming." Mr Moulton added: "we are approached pretty much every day [regarding funding for MG Rover]."
Project Kimber is quite a different proposition to the Chinese inspired bids for the company: mass vehicle production is not a feature of their business plan. Instead, the new MG Car Company would concentrate on niche MG sports cars: they have plans for a full range of sporting two seaters ranging from a New MG Midget, through a mid-sized MG TF replacement, to a 'flagship' model. In addition, certainly in the short term, Project Kimber would also see the continuation of the MG ZT. But the smaller hot-hatch MGs would appear to fall by the wayside. Initial staffing levels would be only around 500, but further staff could be taken on for contract manufacturing for other car companies - much in the mould of Pininfarina and Steyr Puch. If sucessful, the plan would be for employment levels of around 1500-2000.
However, in the absence of a government guarantee, Mr James' options appear to be limited. However, if he can find a buyer for Powertrain Ltd, (a previous attempt to sell the engine and transmission company to SAIC failed last weekend), then there could be a deal to be done.
Which leaves the Magma/SAIC consortium, headed in the UK by ex-Ford boss, Martin Leach. This proposal is thought to retain research and development in the UK, along with production of Rover and MG cars - certainly, in the short term, this would involve the MG TF and Rover 75, plus there would be extensive investment in future model designs for manufacture both here in the UK and in China. The employment levels at Longbridge could be as high as 3000 according to SAIC press releases in the media today. Additionally, this is the bid thought to hold the trump card: SAIC is the owner of much of the current Rover model range intelectual property rights (IPR) having spent £67m last year to acquire them - and clearly there was wide expectation that the Magma/SAIC bid would be the one to hold the most attraction for the administrators. SAIC (who are now fully funding the acquisition attempt*) released a press statement yesterday: "SAIC believes that this proposal represents a compelling proposition for the creditors of the two companies and will focus on the development and distribution of new models and a resumption of car production at Longbridge." However, the Guardian reports today that the £50+m deal for MG Rover fell some way short of the "knockout" deal that was anticipated.
The newspaper quoted Richard Cort, the chairman of the Rover dealers' association who sits on the Creditor's Committee, as saying that the administrators appeared underwhelmed by the offer. "I don't know what the actual offer was but I understand that they [PwC] were very disappointed by both the quantum and the style of the Shanghai bid. I get the impression that this is anything but a done deal - it seems to me that the race to buy Rover is still wide open."
So it would appear that this three horse race still has no sure winner - and whether an outsider can come in at the last moment and pip all three to the post is a tantilising prospect. The next 48 hours could hold the key.
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