Further return for buyers of failed car manufacturer

The Phoenix Four business executives who bought MG Rover from BMW in 2000 have received a further £3.5m in dividends and share payments in the four years since its collapse.

The cash has come from their investment in MGR Capital, a car finance joint venture with a subsidiary of banking group HBOS, now part of Lloyds TSB.

MGR Capital, which bought the Rover cars finance and lease loan book from BMW for £313m in 2001, was wound up last year. The Phoenix Four could also be entitled to a further windfall of £12m from the assets from the wind-up according to company accounts, although their spokesman disputed this figure.

Government inspectors completed a four-year inquiry last week into the collapse of MG Rover and the role of the Phoenix Four: John Towers, Nick Stephenson, John Edwards and Peter Beale. But the report will not be released until a further investigation has been undertaken by the Serious Fraud Office.

When Phoenix Venture Holdings, (PVH) the four men’s master company, and MG Rover’s parent bought Rover Financial Services, it said the acquisition was a significant achievement.

But the interest in MGR Capital was acquired independently of PVH through a company called the Phoenix Partnership. This is owned partly by Edwards and Beale who were both directors of MGR Capital, with the four men each taking £500,000 of preference capital in the business. HBOS owns the balance of the company. The preference shares have provided a dividend of around £100,000 a year for each of the Phoenix Four. Late last year they redeemed the preference shares, netting them a collective windfall of £2m.

Redemption of the preference shares was a precursor to the winding up of MGR Capital. The company was no longer trading because the loan book had been exhausted.

Net assets stood at £23m at the end of 2008. A simple extrapolation suggests the shares held by Edwards and Beale would net them a return of around £12m from the wind-up of MGR Capital. Given that HBOS and Phoenix each own 50% of MGR Capital’s shares this suggests they would each be entitled to half the company’s net assets.

In a written statement, a Phoenix spokesman confirmed the businessmen had received £1.5m in dividends from MGR Capital as well as their original £500,000 investments each. But he said there had been no further funds distributed to the group. “Any other share redemption will be retained by HBOS.”

At the time of the Rover collapse, the Phoenix Four pledged to put any of the assets and funds recovered into a trust to benefit employees.

If the four benefit from their share of the assets left in MGR Capital, it will swell the bounty from their association with MG Rover to £50m, although they dispute this figure. They are also accused of taking more than £40m in pay and pensions from the collapsed carmaker.

In a dossier issued by their public relations advisers the four argued they had been victims of a smear campaign. “The mythical figure of ‘£40m’ in payments to the Phoenix directors is entirely inaccurate and is based on erroneous and mischievous DTI press briefings. It is not supported by published Phoenix Venture Holdings accounts,” it said.

Further return for buyers of failed car manufacturer

The Phoenix Four business executives who bought MG Rover from BMW in 2000 have received a further £3.5m in dividends and share payments in the four years since its collapse.

The cash has come from their investment in MGR Capital, a car finance joint venture with a subsidiary of banking group HBOS, now part of Lloyds TSB.

MGR Capital, which bought the Rover cars finance and lease loan book from BMW for £313m in 2001, was wound up last year. The Phoenix Four could also be entitled to a further windfall of £12m from the assets from the wind-up according to company accounts, although their spokesman disputed this figure.

Government inspectors completed a four-year inquiry last week into the collapse of MG Rover and the role of the Phoenix Four: John Towers, Nick Stephenson, John Edwards and Peter Beale. But the report will not be released until a further investigation has been undertaken by the Serious Fraud Office.

When Phoenix Venture Holdings, (PVH) the four men’s master company, and MG Rover’s parent bought Rover Financial Services, it said the acquisition was a significant achievement.

But the interest in MGR Capital was acquired independently of PVH through a company called the Phoenix Partnership. This is owned partly by Edwards and Beale who were both directors of MGR Capital, with the four men each taking £500,000 of preference capital in the business. HBOS owns the balance of the company. The preference shares have provided a dividend of around £100,000 a year for each of the Phoenix Four. Late last year they redeemed the preference shares, netting them a collective windfall of £2m.

Redemption of the preference shares was a precursor to the winding up of MGR Capital. The company was no longer trading because the loan book had been exhausted.

Net assets stood at £23m at the end of 2008. A simple extrapolation suggests the shares held by Edwards and Beale would net them a return of around £12m from the wind-up of MGR Capital. Given that HBOS and Phoenix each own 50% of MGR Capital’s shares this suggests they would each be entitled to half the company’s net assets.

In a written statement, a Phoenix spokesman confirmed the businessmen had received £1.5m in dividends from MGR Capital as well as their original £500,000 investments each. But he said there had been no further funds distributed to the group. “Any other share redemption will be retained by HBOS.”

At the time of the Rover collapse, the Phoenix Four pledged to put any of the assets and funds recovered into a trust to benefit employees.

If the four benefit from their share of the assets left in MGR Capital, it will swell the bounty from their association with MG Rover to £50m, although they dispute this figure. They are also accused of taking more than £40m in pay and pensions from the collapsed carmaker.

In a dossier issued by their public relations advisers the four argued they had been victims of a smear campaign. “The mythical figure of ‘£40m’ in payments to the Phoenix directors is entirely inaccurate and is based on erroneous and mischievous DTI press briefings. It is not supported by published Phoenix Venture Holdings accounts,” it said.

Further return for buyers of failed car manufacturer

The Phoenix Four business executives who bought MG Rover from BMW in 2000 have received a further £3.5m in dividends and share payments in the four years since its collapse.

The cash has come from their investment in MGR Capital, a car finance joint venture with a subsidiary of banking group HBOS, now part of Lloyds TSB.

MGR Capital, which bought the Rover cars finance and lease loan book from BMW for £313m in 2001, was wound up last year. The Phoenix Four could also be entitled to a further windfall of £12m from the assets from the wind-up according to company accounts, although their spokesman disputed this figure.

Government inspectors completed a four-year inquiry last week into the collapse of MG Rover and the role of the Phoenix Four: John Towers, Nick Stephenson, John Edwards and Peter Beale. But the report will not be released until a further investigation has been undertaken by the Serious Fraud Office.

When Phoenix Venture Holdings, (PVH) the four men’s master company, and MG Rover’s parent bought Rover Financial Services, it said the acquisition was a significant achievement.

But the interest in MGR Capital was acquired independently of PVH through a company called the Phoenix Partnership. This is owned partly by Edwards and Beale who were both directors of MGR Capital, with the four men each taking £500,000 of preference capital in the business. HBOS owns the balance of the company. The preference shares have provided a dividend of around £100,000 a year for each of the Phoenix Four. Late last year they redeemed the preference shares, netting them a collective windfall of £2m.

Redemption of the preference shares was a precursor to the winding up of MGR Capital. The company was no longer trading because the loan book had been exhausted.

Net assets stood at £23m at the end of 2008. A simple extrapolation suggests the shares held by Edwards and Beale would net them a return of around £12m from the wind-up of MGR Capital. Given that HBOS and Phoenix each own 50% of MGR Capital’s shares this suggests they would each be entitled to half the company’s net assets.

In a written statement, a Phoenix spokesman confirmed the businessmen had received £1.5m in dividends from MGR Capital as well as their original £500,000 investments each. But he said there had been no further funds distributed to the group. “Any other share redemption will be retained by HBOS.”

At the time of the Rover collapse, the Phoenix Four pledged to put any of the assets and funds recovered into a trust to benefit employees.

If the four benefit from their share of the assets left in MGR Capital, it will swell the bounty from their association with MG Rover to £50m, although they dispute this figure. They are also accused of taking more than £40m in pay and pensions from the collapsed carmaker.

In a dossier issued by their public relations advisers the four argued they had been victims of a smear campaign. “The mythical figure of ‘£40m’ in payments to the Phoenix directors is entirely inaccurate and is based on erroneous and mischievous DTI press briefings. It is not supported by published Phoenix Venture Holdings accounts,” it said.