Management poised for buyout at Group Lotus: Sale would end seven costly years of ownership for General Motors

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The Independent Online
MANAGEMENT at Group Lotus is on the verge of buying out the Norfolk-based sports car and engineering company from General Motors.

Negotiations on the buyout are in the final stages. The management team is being led by Adrian Palmer, managing director of Group Lotus and formerly managing director of the Lotus Cars side.

Mr Palmer said yesterday: 'We have reached a preliminary agreement on the buyout, though as yet no definitive agreement has been signed.'

He anticipated it would take 'another four to six weeks before final completion'. The 750 employees at Lotus headquarters at Hethel are expected to learn more about the changes this week.

Mr Palmer declined to give financial details, or the names of colleagues taking part in the buyout.

The buyout team is unlikely to include Martin Long, managing director of the group's profitable engineering contract business. He is set to take a post with GM-Europe's technical development centre in Germany, where all Vauxhall and Opel models are designed and engineered.

A sale to management would end seven costly years of ownership for GM, which is believed to have lost more than pounds 100m on Lotus since paying pounds 22m for the financially troubled company .

Lotus has become one of the most famous names in sports cars. It was founded in 1955 by the late Colin Chapman, winner of seven motor racing world championships.

The first passenger car, the Elite, was produced in 1957 and the Elan was launched in 1962. The Esprit and Eclat models were rolled out in 1975.

Financial results for the 1991 year at Lotus showed pre-tax losses of pounds 14.7m, all due to problems on the car side which alone lost pounds 15.8m.

Those results forced GM, which originally bought the company for its engineering expertise rather than sports cars, to cut its losses rather than increase investment.

Mr Palmer is optimistic, however, that Lotus could be profitable on production of 350 cars a year. 'We are back in control of the business. I believe Lotus can be a commercial success. I wouldn't be doing this otherwise,' he said.

The management's move comes 10 months after Lotus Cars stopped production of the loss-making Elan model. GM's interest in Lotus waned considerably after the debacle of the Elan, which arrived late and over budget. Each car was sold at a loss.

Lotus has shrunk considerably since then, with 300 employees made redundant and resources concentrated on the lower-volume production of the Esprit S4 and Sport 300 models.

Rationalisation at Lotus also involved GM resuming ownership of the Millbrook test track in Bedfordshire.

Lotus's engineering know-how shot to prominence in another sport last summer, when Chris Boardman won an Olympic gold medal riding a revolutionary Lotus Sport monocoque bike. There are plans by Lotus to license the Leeds-based Casket group to make a production version of the racing bike.

The privately-owned Lotus Formula One motor racing team will be unaffected by any changes at Group Lotus.