BMW dashed hopes that MG Rover would get additional funding yesterday, claiming its troubled former British subsidiary would get nothing more than the £500m loan agreed when the Phoenix Consortium bought Rover for £10 in May.
Werner Samann, a BMW board director and former head of Rover, speaking at the Birmingham International Motor Show, said: "The balance sheet will not change dramatically from the £740m of transfer assets agreed on May 9.
"All the risks are with the new owners. Some circumstances may have changed - the 'rip-off Britain' campaign and the fuel crisis. But this is the risk of the entrepreneur. That's the responsibility of the new owner."
The two companies are due to agree on "completion accounts" (Rover's final balance sheet) by the end of the year. MG Rover's new chairman, John Towers, is understood to have been pressing the German company for more cash on the back of falling car prices, plummeting sales and the weakening euro.
The "rip-off Britain" campaign has hit the value of the 50,000 Rover cars the Phoenix Consortium inherited from BMW. These stocks were valued at £740m in May. Since then, Rover has cut its new car prices twice and seen its sales drop by as much as 44pc in a single month. At the same time,the euro has plunged to new depths versus the pound, further hurting MG Rover's business.
A spokesman for BMW later said that if Mr Towers contested the completion accounts, BMW and MG Rover could end up in court. The two companies would first attempt to reach agreement via an independent arbitration process. However, if this fails they would go to court to settle the final accounts.
MG Rover said: "The terms of the Rover BMW deal are confidential but Rover is not expecting any more money than that provided for in the May agreement."
Since the sale of Rover and Land Rover, Professor Samann has been responsible for disentangling the two businesses from BMW. He said MG Rover's recent claim in a regional newspaper report that it would buy BMW's British power train operation, which makes engines and gearboxes for Land Rover and Rover, was "wishful thinking".
He said: "There are several international companies which are interested in the power train business. MG Rover is one of those businesses." Land Rover's new owner, Ford, is understood to be keen not to see the power train operation pass into MG Rover's hands.
The comments by BMW come at a difficult time for MG Rover. Two of the company's non-executive directors, David Bowes and Terry Whitmore, announced earlier this week they would form their own car venture, separate from the Rover project, suggesting dissatisfaction with Rover.
MG Rover said yesterday the venture between Mr Bowes, who heads the sports car maker Lola, and Mr Whitmore, of Mayflower Vehicle Systems, was not a "rival venture" to MG Rover but just "an extension of their existing businesses".
Since selling Rover and Land Rover, BMW's British operation has been reduced to the Mini and two new factories, an engine plant in Hamshall, which begins production at the end of next year, and the new Rolls-Royce factory near Chichester, which will open in 2003.
Courtesy By Telegraphe
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