Phoenix Venture Holdings

Phoenix Venture Holdings Ltd
Type Holding Company
Industry Automobiles
Founded 2000
Headquarters Longbridge, Birmingham
Key people John Towers, Peter Beale, Nick Stephenson, and John Edwards
Subsidiaries MG Rover & Powertrain Ltd

Phoenix Venture Holdings (PVH), also known as the Phoenix Consortium, is a British company formed by four businessmen (John Towers, Peter Beale, Nick Stephenson and John Edwards). Following BMW's break-up of the Rover Group a financially complex deal involving a £500 million "dowry payment" from BMW, resulted in PVH purchasing Rover in May 2000 for the notional sum of £10, relaunching the car company as MG Rover. MG Rover and related companies placed themselves in administration on April 8, 2005.

Four years later and after spending £16m the Government finally released the report investigating the collapse of the company.[1] The report, which was only concerned with dealing with the directors and their actions while MG-Rover Group was still trading, revealed that the five executives involved took £42m in pay and pensions from the troubled firm before it collapsed.

The report also commented on the personal relationship between Nick Stephenson and Dr Qu Li, who was paid more than £1.6m in the 15-month period up to April 2005 for consultancy services. Additionally, fellow Director Peter Beale was accused of installing a software application called Evidence Eliminator, which may have destroyed documentation relevant to the investigation. The investigators further accused Mr Beale of giving "untruthful" evidence during interviews.

In return the Directors have accused the findings of being a whitewash and a witchunt, and it remains unknown the exact details of the actions of key Government Ministers at the time of the collapse.

Conservative business spokesman Kenneth Clarke said it was right the report criticised the Phoenix Four, whose behaviour was "disgraceful". Lord Mandelson said the Phoenix group had not shown an "ounce of humility" about the firm's demise and they owed an apology to the firm's employees and creditors. However his comments that steps will be taken to disbar the five executives have been discredited, and the report at no point uses language stronger than 'inappropriate' in describing the activities of the Group Directors.

Phoenix Venture's main trading businesses are/were:

Contents

Background

BMW had acquired the Rover Group (purely for the Mini brand) in 1994, but by 1999 it had become a major financial liability. Since September 1999 the venture capital company Alchemy Partners, run by Jon Moulton and Eric Walters, had been in talks with BMW about acquiring Rover. When news of the talks became public on March 16, Alchemy was widely expected to take control of MG and Rover. By that time, it was already decided that BMW would retain Mini and sell Land Rover. Alchemy intended to name the company the MG Car Company, selling the MG F roadster and possibly developing additional, limited production sports cars. The Rover brand would have been dropped and all volume production abandoned. Jon Moulton withdrew the Alchemy bid when the Government added extra conditions to the sale, and a march through Birmingham led by Prof Carl Chinn opposed the Alchemy bid

On April 6, 2000 John Towers — the most prominent of the four men known as the Phoenix consortium — presented a counter-offer to BMW. The Transport and General Workers Union (T&G), the UK Department of Trade and Industry (DTI), and the British public in general all threw their support behind Towers and the Phoenix Consortium, as Phoenix were the only potential bidders proposing to retain high-volume car production and full employment at the Rover plant in Longbridge, Birmingham. On May 8, following a last-minute injection of finance from the First Union Bank of North Carolina, a deal with Phoenix was agreed. The sale occurred on May 9.

Due to UK regulations that hold the prior owner of a company responsible for all redundancy payments if the said company declares bankruptcy within 3 years of sale, BMW guaranteed that Phoenix Venture Holdings (initially named MG Rover Holdings) would have enough money to keep Rover Group in business for at least 3 years following the sale. The agreed "dowry" from BMW was made up of a £427million interest-free loan and stocks of cars.

Kevin Howe was appointed MG Rover's managing director in July 2000.

Phoenix's short-term plan was to expand the MG range with sporting versions of existing Rovers, introduce new versions of the Rover 25 model, re-engineer and redesign the MG F, and eventually replace the entire model range with new cars developed through joint venture. Sadly, the new models would never reach showrooms. However, the consortium continued to enjoy strong UK press support for several years following the Phoenix coup.[2]

Other assets

Included in the sale were:

For accounting purposes, Phoenix Venture Holdings also includes various non-trading subsidiary companies that exist in name only.

These businesses include:

SAIC

See MG Rover

Sources and further reading

  1. ^ "War of words over Rover collapse". BBC News. September 11, 2009. http://news.bbc.co.uk/1/hi/uk_politics/8251846.stm. Retrieved May 22, 2010. 
  2. ^ "Autocar Awards 2002:Outstanding achievement: Winner MG Rover: "....For a company that two years ago was losing £800m a year with falling sales, no firm plans for new product and no effective business partners whatever, this has to rate as one of the biggest comebacks in Automotive history. Long may it continue"."". Autocar 234 (nbr 8 5512): page 51. date 20 November 2002. 

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