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MG Rover update

EU offers MG Rover training funds

The European Union has announced that the UK government can "re-allocate" up to €100m (£68m) of regional aid funds towards helping workers who lost jobs at MG Rover. The news comes as manufacturing groups say about 1,200 staff at former suppliers to MG Rover face redundancy.

"Part of a €890m (£606m) programme could now be redirected to alleviate the consequences of large-scale redundancies," the European Commission said in a statement.

Regional policy commissioner Danuta Huebner said a team of commission officials had arrived in the UK to talk with government officials about how to use the funds, reports the BBC.

Anything between €50m (£34m) and €100m (£68m) of the EU money can now be re-allocated to dealing with the closure of the MG Rover plant at Longbridge in Birmingham.

"Mainly it would be used for training and retraining," said a commission spokesman.

"The second objective would be for business support, to help businesses be created and reinforced in their competitiveness."

The MG Rover Task Force set up in the wake of MG Rover's collapse has already paid grants of £300,000 to 34 suppliers affected by the crisis.

The body, set up to help workers at Longbridge, said the payout had prevented 700 redundancies among supply firms.

The support package for workers affected includes more than £60m to help diversify industry in the Longbridge area, and to support MG Rover's supply chain.

A further £50m will fund retraining, while £40m will be used for statutory redundancy payments. On Tuesday, administrators said they have sent details of what MG Rover assets are up for sale to "40 of the more likely prospective buyers".

Funds extended to Ryton plant

The MG Rover Taskforce has decided to extend the Government-backed package of aid to the 750 workers who lost their jobs after a third shift at Peugeot’s Ryton plant in Coventry was cut. The task force’s 23-strong membership includes Nick Paul, the chairman of regional development agency Advantage West Midlands, trade union officials, CBI director general Sir Digby Jones, local MPs and the leader of Birmingham City Council.

Meanwhile a dedicated MG Rover hotline opened by Jobcentre Plus, part of the Department for Work and Pensions, to allow employers to fill vacancies by hiring some of the 5,000 redundant Rover staff has attracted worldwide interest, reports the FT. Jobcentre Plus aims to interview 1,000 ex-MG Rover workers a day this week.

£7m alleged payout for Phoenix Four

The Phoenix Four can expect an alleged £7m payout this year when a car-financing business in which they have a 50% stake in is wound up, reports the Guardian.

The fresh £7m payment is to come from MGR Capital, a car-finance business owned jointly by the Phoenix Partnership and a subsidiary of bank HBOS.

Its latest accounts, for the year to the end of December 2004, show the business to have net assets of £12.2m. MGR Capital has been progressively run down as the car loans and leases it manages have expired.

When it is wound up, the Phoenix Four, four executives John Towers, Nick Stephenson, Peter Beale and John Edwards originally seen as heroes from saving MG Rover when it was sold for £10 by BMW, are due to have their £2m preference shareholding in the business repaid. The remaining £10.2m of assets are then to be split with HBOS, its joint venture partner.

The four men have already received dividends of £1.3m from MGR Capital over the last three years.

MGR Capital bought the Rover loan book, originally known as Rover Financial Services, in November 2001 for £312.8m from BMW. Phoenix Venture Holdings, Rover's parent company, said at the time that the acquisition was a significant achievement that would let it control the re-marketing of second-hand cars.

The profits split with HBOS assumes that the value of the assets recorded in the books at the end of 2004 are not impaired by the problems at the car company.

Since MGR Capital is not owned directly by PVH it is unclear whether the Phoenix Four intend to make any of the proceeds from a winding up available to a trust that is being set up for the benefit of the Longbridge workforce, the Guardian says.

(Source: The Guardian)

Eight sales subsidiaries go into administration

Eight European MG Rover sales subsidiaries have gone into administration.

Accountant PricewaterhouseCoopers made the announcement this morning concerning the sales centres in Germany, Spain, the Netherlands, Belgium, Italy, Portugal, France and Ireland.

Tony Lomas, Steven Pearson and Rob Hunt, partners in PricewaterhouseCoopers, have been appointed joint administrators to the subsidiaries of MG Rover Group Limited, which collapsed on April 8.

The eight act as sales centres between MG Rover UK and dealers within each European region, providing a link between the manufacturing side of its business and its distribution channels in Europe by co-ordinating branding, sales, marketing, logistics and transportation support.

The eight are MG Rover Deutschland GMBH, MG Rover Nederland B.V., MG. Rover Belux S.A./N.V., MG Rover España S.A., MG Rover Italia SPA, MG Rover Portugal-Veículos e Peças LDA, Rover France SAS, Rover Ireland Limited.

The administrators plan to continue to trade the businesses as usual while they look at options, particularly concerning the businesses’ unsold European specification vehicles.

Lomas said: “Our appointments as administrators to all of the national sales companies across Europe should enable us to handle local customer and dealer issues in a more constructive manner. Additionally, it will ensure the supply of left hand drive vehicles to the market is carried out in a controlled way for the benefit of all concerned.”

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