Phoenix sells MG Rover parts arm to Caterpillar for £100m

Phoenix Venture Holdings, the owner of MG Rover, yesterday raised more than £100m by selling the loss-making car manufacturer's profitable parts business to the US construction equipment giant Caterpillar.

Phoenix Venture Holdings, the owner of MG Rover, yesterday raised more than £100m by selling the loss-making car manufacturer's profitable parts business to the US construction equipment giant Caterpillar.

A spokesman for Phoenix, which is controlled by four West Midlands businessmen, insisted that the proceeds of the sale would be re-invested in the car business. "There is absolutely no question of any of the directors taking a share of the proceeds of this transaction," he added.

The Phoenix Four as they have become known, were heavily criticised earlier this year by the chairman of the Commons Trade and Industry Select Committee, Martin O'Neil, for "financial sleight of hand" in the way that they had made millions of pounds by transferring profitable parts of the MG Rover business into their direct ownership. The Phoenix chairman, John Towers, himself a former chief executive of Rover, came in for particular criticism. Kevin Howe, the chief executive of MG Rover, said the money would be invested in its car manufacturing operations ahead of the company's planned strategic alliance with China's Shanghai Automotive Industry Corporation.

The parts sell-off brings the total raised by Phoenix from asset disposals to around £160m. Earlier this year, it sold half of MG Rover's Longbridge site in Birmingham to the property group St Modwen for £42.5m, and last year it raised £16.6m through the sale of another parcel of land to Advantage West Midlands.

Phoenix will receive an undisclosed share of the future profits from the parts business and also has the right to buy the business back from Caterpillar in 2008 or 2009. The parts business sources, distributes and sells components and accessories to MG Rover's worldwide dealer network, helping to support some 2.5 million MG Rover cars which are still on the road.

Caterpillar Logistic Services has managed the business for MG Rover since 2001 after it won the contract from Unipart.

The Phoenix spokesman denied that the parts sale was an indication that MG Rover is running out of cash. It received a £500m dowry from BMW when the business was sold for a nominal £10 four years ago.

Phoenix lost £95m in 2002 and as of December that year, it had net cash of £315m. It is yet to publish its accounts for 2003, although Mr Howe has said the car company will not make a profit until 2006.

Reaching a successful agreement with Shanghai Automotive, China's biggest car producer, will be vital to the future of MG Rover. It will enable the company to develop a range of small and medium-sized cars and should also lead to manufacture under licence of the top-of-the-range Rover 75 in China.

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Sport
world cup 2014
Sport
Popes current and former won't be watching the football together
PROMOTED VIDEO
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
News
business
News
Mick Jagger performing at Glastonbury
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
News
people
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial