£6m for the Rover bosses

13 April 2012

THE MG Rover boss John Towers and the three other members of the controversial 'Phoenix Four' are to share in a new £6.1m windfall - on top of £40m they have already pocketed.

This latest money will come from the firm's car financing arm, MGR Capital, which lends cash on hire purchase terms to customers wanting to buy MG and Rover cars.

News of the extra cash emerged from records at Companies House in Cardiff. It can also be revealed that the four have already just shared a £195,000 dividend payment from MGR Capital.

It will infuriate MG Rover's 6,100 strong workforce, who face the prospect of redundancy after the company went into administration.

It has emerged, however, that the Government has set aside £25m to keep Rover afloat while attempts are made to re-start talks with Shanghai Automotive Industry (SAIC). The money is enough to keep the company running until after the General Election on 5 May.

The Phoenix Four's payout will anger Rover dealers who face the prospect of going bust and up to 150,000 Rover customers who have learned that their warranties could be worthless. It is yet another lucrative bonus for the team who five years ago bought the loss-making Longbridge car-maker in Birmingham - with assets worth in excess of £1bn - for just £10.

SPECIAL REPORT: Read our full round-up of the collapse of MG Rover

MGR Capital is one of those 'ring-fenced' from the main Rover business in 2001 when it was put into a separate business, controlled by the Phoenix Four's Phoenix Venture Holdings.

Towers and fellow directors Peter Beale, John Edwards and Nick Stephenson have already taken out at least £40m from Rover in the form of salary and pension payments, loan repayments and interest.

They could also benefit from a variety of other assets including Studley Castle in Warwickshire worth at least £8m and a number of Rover dealerships, thought to be worth around £10m. The four pledged to the administrator earlier this week some of these assets - but did not include the MGR Capital windfall. It will be divided out between the four when MGR is wound up, which could be later this year.

MGR Capital is a 50-50 joint venture with HBOS. The bank will also receive a £6.1m payout on MGR being wound up. MGR's 2004's annual accounts just filed show the bank also took out a £195,000 dividend last year.

A spokesman for the Phoenix directors said they would not comment further 'on the already widely reported issues surrounding their personal finances'.

Earlier yesterday it emerged that MG Rover will not honour its warranty obligations. The firm said there were 'insufficient funds' to support repair work if cars break down while under three-year guarantee.

It means that up to 150,000 Rover owners who have bought cars in the last two years face paying for any problems with their vehicles or look for another warranty provider. Rob Hunt, of the MG Rover administrator team, said that all dealers had been contacted to explain the situation.

In a further blow to Rover yesterday, its cars came way down a customer satisfaction league table compiled by motor industry quality specialists JD Power and What Car? magazine.

Top of the table was Japanese luxury car-maker Lexus, closely followed by Skoda, then Honda, Toyota and BMW in the top ten. Only five major manufacturers finished lower than MG Rover in the 32-company list.

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