1. I am aware that the company mortgaged the premises and business etc to raise captial via I believe Lloyds Bank. However this is not to me 'selling' the business it is mearly raising cash on the capital you have.
Sorry for the delay Phil. I lost your message in the rush.
You are correct. It was Lloyds Bank. The MMC needed the money. They had gone through the legendary MMC reserves by then. Ergo they borrowed. I seem to remember that first loan was arranged at the end of 2002. They mortgaged everything..land, buildings, accounts, chattels for a total of 1,000,000. The interest service costs started then.
I see it as good business practice if you need the cash for something to realise it rather than have it sitting around doing nothing.
Well..we have a difference of opinion. Borrowing for a specific investment can be opportune. Borrowing to cover operating costs is different. Most financial advisers would maintain that
receiving a junk of interest every year on reserves is better than
paying interest servicing a debt. In the first case, you have a large income and maneuvering room, in the second scenario, you aggravate the core problem by increasing operating costs with big bank interest and you run a deep risk of having the bank running the show if you can't cure your ills ASAP.
Lorne you say the company then sold out to a property developer. Once again I have no problem with this as good business practice. It is all about focussing on your primary business and getting away from distractions.
Yes. That was three years after the first loan (end of 2005). Sadly, the second scenario I mentioned above did happen. It became imperative to buy out the bank. Frankly, I was inexpressively relieved that the sale was managed..t'was brilliantly done under incredible pressure.
However, I cannot agree that selling a business' land and plant is normally viewed as a "focussing on one's primary business". The simply story is that had to have the cash and that was the only way to get it. They rented the same oh-so-necessary assets back for a sum double the interest they were paying to Lloyds.
As well, I feel the analogy you used is not on point. I can agree and have many times pieced off and sold unnecessary divisions of struggling businesses. Even if there is a book loss involved, finding a way to operate in the black is key. However, I cannot agree that the only land and factory of an automobile company is an unnecessary division.
2. The issue of the Plus 8 has been mentioned in context of the German market but is surely a key influence to many markets. The fact that the Rover V8 was a tired out old Buick that simply could not survice in the modern world was something out of the companies control. I think the demise of the Plus 8 is a key change to come out of the last five years as well.
I agree. I have no stance on another Plus 8. I am simply a messenger for others on that one. I was one of those, along with the Works, who hoped the Roadster would fully fill the Plus 8 gap.
The only thing I have never understood V8-wise is why the MMC would choose any engine that would not fit all Morgan body types. One can always fit a smaller engine into a larger space but one cannot fit a larger engine into a smaller space.
3. The other big change in recent years is the growth of the 'rich list'. More and more people have more and more disposable income at the top end. There is a boom industry in 'toys' for these as a TV programme (I think on BBC2) covered the other night. This demographic is one which undoubtably Morgan can appeal to, in particular with the Aero 8 with it's mix of modern and traditional looks. They all have two or three Ferraris and Porsche etc but few have Aero's. The appeal of an 'individual hand made car' could be high to this demographic. This demographic is a product of the late 80's and 90's.
I think you are right. All those plush baby boomers! It is that demographic that is increasing sales with no effort. The issue is finding a way to make money from it. So far that has been elusive.
Lorne
P.S. There are elements of these discussions that may be a little too detailed for some. I can appreciate that fully. If there is any distress, please send me or Phil a PM.
