MG Rover in sale and leaseback deal

HEAVILY loss-making MG Rover has sold off its historic Longbridge carmaking plant for £42.5m.

The carmaker, suffering from falling sales and at the centre of a fat-cat row over payments of £21m to its management team, said today that it has entered into a sale and leaseback arrangement with industrial land owner St Modwen Properties. MG Rover will enter into a 35-year lease for the most of its 248-acre plant near Birmingham.

The company denied it is selling the family silver. A spokesman said: 'This is a quite usual mechanism for large manufacturers to make efficient use of their asset base and raise funds.'

The company will pay annual rent, initially £3.6m, for Longbridge. Chief executive Kevin Howe said: 'The deal generates cash for our cars business today and allows us to invest in the car company's many product development activities.'

But union leaders are already badgering management to unravel the group's accounts and justify their massive salary payments. Executives led by John Towers bought the near-bust company for £10 in 2000 and despite losses of £280m over the past two years have paid themselves £21.4m.

'The deal raises a number of concerns for our members,' said a spokesman for Amicus. Not least is a provision for 'the sensible release of surplus land', which workers fear could mean MG Rover shrinking its manufacturing facilities at Longbridge. The company has already sold 60 acres of surplus land to St Modwen for £17m.