Rover Welcomes Phoenix Takeover With $765 Million Loan
Jan. 13, 2005
The ongoing saga of who will take over Bayerische Motoren Werke AG's (BMW) 's money-losing Rover operations in the United Kingdom is over. BMW -- which was still losing money despite $4.5 million in investments since 1994 -- agreed May 9 to sell the unit ...
The ongoing saga of who will take over Bayerische Motoren Werke AG's (BMW) 's money-losing Rover operations in the United Kingdom is over. BMW -- which was still losing money despite $4.5 million in investments since 1994 -- agreed May 9 to sell the unit for a symbolic price of 10 pounds (US$15.33) to a consortium led by former Rover CEO John Towers known as Phoenix. BMW also agreed to loan Phoenix 500 million pounds (US$765 million), which it sees as a credit to be paid back. Towers says he intends to maintain auto production at about 200,000 units annually. However, some 1,000 to 2,000 of the 8,500 workers at Rover's Longbridge plant could be trimmed. (A previous ownership bid had planned to trim the workforce -- the largest auto plant in the United Kingdom -- in half.) Towers' aim is to achieve a positive cash flow within 14 months and to be profitable within two years. The company will make both Rovers and MG sports cars.
