Background
BMW had acquired the Rover Group in 1994, but by 1999 it had become a major financial liability. Since September 1999 the venture capital company Alchemy Partners, run by Jon Moulton and Eric Walters, had been in talks with BMW about acquiring Rover. When news of the talks became public on March 16, Alchemy was widely expected to take control of MG and Rover. By that time, it was already decided that BMW would retain Mini and sell Land Rover to Ford. Alchemy intended to name the company the MG Car Company, selling the MG F roadster and possibly developing additional, limited production sports cars. The Rover brand would have been dropped and all volume production abandoned. Jon Moulton withdrew the Alchemy bid when the Government added extra conditions to the sale, and a march through Birmingham led by Prof Carl Chinn opposed the Alchemy bid
On April 6, 2000 John Towers — the most prominent of the four men known as the Phoenix consortium — presented a counter-offer to BMW. The Transport and General Workers Union (T&G), the UK Department of Trade and Industry (DTI), and the British public in general all threw their support behind Towers and the Phoenix Consortium, as Phoenix were the only potential bidders proposing to retain high-volume car production and full employment at the Rover plant in Longbridge, Birmingham. On May 8, following a last-minute injection of finance from the First Union Bank of North Carolina, a deal with Phoenix was agreed. The sale occurred on May 9.
Due to UK regulations that hold the prior owner of a company responsible for all redundancy payments if the said company declares bankruptcy within 3 years of sale, BMW guaranteed that Phoenix Venture Holdings (initially named MG Rover Holdings) would have enough money to keep Rover Group in business for at least 3 years following the sale. The agreed "dowry" from BMW was made up of a £427million interest-free loan and stocks of cars.
Kevin Howe was appointed MG Rover's managing director in July 2000.
Phoenix's short-term plan was to expand the MG range with sporting versions of existing Rovers, introduce new versions of the Rover 25 model, re-engineer and redesign the MG F, and eventually replace the entire model range with new cars developed through joint venture. Sadly, the new models would never reach showrooms. However, the consortium continued to enjoy strong UK press support for several years following the Phoenix coup.
Read more about this topic: Phoenix Venture Holdings
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