LONDON (Brand Republic) – MG Rover’s fortunes suffered further following the announcement by its former owner BMW not to provide a further £150m of funding for the UK-based car maker and the German group’s decision to offer the Longbridge UK car plant to foreign buyers.
Rover directors had approached BMW about a further £150m payment to make up for the fall in the value of the stock that was acquired at the time of the takeover. Rover also planned to buy the Longbridge plant by December.
The Phoenix Consortium, led by former Rover director John Towers, paid a symbolic £10 for the car-company in May this year. At the time, it received a dowry payment from BMW believed to be in the region of £500m. The finalising of the deal, which has taken several months, has recently been completed as car prices in the UK have fallen following consumer demand. This drop in prices led Rover to ask for a further £150m.
BMW said that that it signed the deal on May 9, transferring all the assets and liabilities to Phoenix based on their value on that day.
Rover is said to be dependent on taking control of the Longbridge engine plant where it plans to develop a new range of sporty vehicles under the MG brand. It would also speed the company’s return to profits by 2002 by cutting costs.