Talk Morgan Forums Community The Malvern Arms Has the bubble burst?

Not so sure they really bought it back, more they complied with the terms of a loan where 'it' (land / factory) were collateral, so it was signed back over to MMC when the loan was cleared

The article does state it was a sale and leaseback, so they sold the freehold title to the land and leased it back on a term of x number of years. A not uncommon way or raising capital.

[quotes]The article does state it was a sale and leaseback, so they sold the freehold title to the land and leased it back on a term of x number of years. A not uncommon way or raising capital.[/quote]

There is a confusion between completely unrelated transactions. These things should be set right for posterity. These days there are far sources of information but most are dubious.

1. By 2002, the Aero development and losses had the company on the ropes. The legendary and substantial MMC reserves/non-business assets had been dissipated. Accordingly, banks refused to lend as they were worried about the company asset value remaining. Peter Morgan owned the land and buildings personally, as his father had before him. The MMC and his father, HFS, and the Company had never had a bank loan. Peter finally agreed to put up his property titles as collateral. Charles Morgan negotiated a small loan in January 2003 which went to pay operating debts. At Peter's passing later that year, the family shareholders elected Alan Garnett as Chairman. Garnett was a non-family, non-staff director, who had been brought onto the Board by Peter in 1999.

2. By the end of 2005, the Company was in dire straits again but this time for larger sums. Garnett had Peter's widow, PM's second wife, agree to sell the land & building to the Company. Garnett instantly found a real estate investor to buy all of these assets over time and instantly leaseback the land and building, in early 2006, exactly as suggested above. That funded the company but saddled it with an expensive lease it had never paid before. The shareholders drew money personally from the sale and the company was again funded. In April/May of 2006, the shareholders agreed that Charles Morgan would stay on and be part of a four man executive committee (Charles Morgan, Matthew Parkin, Tim Whitworth and Steve Morris) to run the company. Garnett simultaneously resigned. Charles Morgan resigned as a director in 2013. Tim Whitworth resigned in 2016. Matthew had resigned much earlier and Steve Morris, who started in the Tin Shop and became production director and finally CEO.[i] A few months before left, he was made board Chairman.

3. The non-trad development continued and after the property sale payments ended the company was shaky once more. However, a large development grant, 2 million was obtained from the British government. By then the book losses had reached a sum much higher than company's paper value. A new professional finance man was amicably hired away from the Company's auditors. A reorganization was begun. The original MMC and many others cos. were made defunct and a new holding company, Morgan Technologies, purchased the assets (real and intellectual rights) of the old company. That purchase price established a positive equity for the new company. In January 2016, the Company received another grant, this time for 6 million grant from the British government. The remaining directors had the Company buy back the land & building sold in 2006.

4. In 2019, all the company's shares were purchased by a holding company of InvestIndustrial. The holding company name is Sports Cars (England) Acquisitions Limited. Many here will remember their long control of Aston Martin.[/i] The sales amount paid was supposedly 6 million but I never bothered confirming with a second source. InvestIndustrial is another company associated with The Carlyle Group, the world's largest private investment company..with 1000s (thousands) of associate companies around the globe. The Carlyle head office is in Washington, DC, but they have many offices. The name of Morgan Technologies was changed back to the Morgan Motor Company in late 2020. The old company of the same name and others were closed or made dormant. Its up on Company House as well.

The latest (2021 as 2022 is pending) news is that MMC still has its HSBC loans AND a 10 million credit facility put up by its new owners. This makes the financing area moot. The current owners can do whatever they want. It is seemingly odd that they bought the MMC. But the last Chairman under the Morgan Family ownership is/was a noted turnaround expert. He could have had the connections, even at this level. In my working days, I was in the same field.

All sources for this are public. I will not post the private stuff. It is unneeded before the 5th pint.

L.

Thanks for the fuller picture, its not unusual for investment companies/venture capitalists to buy up a company with loans which it then straddles the company with, to pay off. Best bit of parent company guarantees and internal credit lines and such like is they can be withdrawn at very little notice, if not already called upon. But the article was correct in that it was a sale and leaseback of not just the land but the buildings. Its been my experience and I presume in this case the UK Government grants will have some form of conditionality attached to them , usually over a certain number of years time frame eg 10 or 20 years and usually once satisfied, leave the company owners unencumbered to do what they will.

/drift mode enabled.

Thank you Gomog. One observation on the comments you highlight.

"The latest (2021 as 2022 is pending) news is that MMC still has its HSBC loans AND a 10 million credit facility put up by its new owners". Whilst operationally the InIn £10mil credit line is great to allow MMC breathing room for the on-going development this is in effect just extended debt the company will carry moving forwards ? Unless InIn move the company on and write this amount off as part of the assumed resale at some point in the future they are just deeper in debt at this point. Some brave moves I guess.

The £2m and £10m government investment seems an interesting side story. By ratio of company size they seem quite large. However in a self-interested way I am pleased some tax £ went to the UK in a special case. I am guessing they could have been used for a lot of other things (potholes, health, training the living workforce etc) but once in a while it is nice to see something of the UK plc being preserved! (as well as the jobs)
/sorry

Alistair, you asked "What makes a (Trad) Morgan."

Seems to me that defining that which may or not be classified as a Trad Morgan could match many of the discussions from years past on Morgan forums relative to the value or otherwise of "originality" in the Morgan community...(-:

I assume that the OP was seeking discussion on the market value of Morgans and the way any change in the perception of value might affect the owners financial planning in the passage of time..?

A Trad..? I like the idea that the wooden frame and alloy panels on my mid 80`s carb fed +8 were formed by craftsmen using TRADitional skills passed down over generations... Works for me. (-:

As for the market value of a Trad compared to more recent Morgans... I guess a brief internet search could answer that question...?

It seems the MMC may have moved with the times as best they could to provide that which baby boomers changing priorities and expectations required...?

I suspect the MMC`s customer base may predominately be baby boomers, and as such has rather obvious limitations...?

Given the state of UK and world economics, I suspect there are likely to be quite a few bubbles bursting in time... ?

Yes. Very astute. But it is often wiser, for a number of reasons, for a parent company to "lend" than to "invest" in its subsidiaries. And the loan would not disturb the HSBC as they have the pledge of all assets in first position.


Correction. The second grant was for £6m not £10m. Yes, the grant was for far more than the pre-reorganization (2011) book value of the old MMC, though the present company evaluated the assets they transferredfrom the original compnat at £15m by paper transaction. There is an interesting thing in the actual net losses after the transfer of control and change of direction, approximately 1999 through to the Investindustriel purchase. Without examining the profit/loss of each model type we can calculate the total figure as the sum of original value of the company in 1999, the value of Peter Morgan's land and building, to which we add the grants amount (less the part used to purchase the land & buildings back). The change of direction did not seem to work out.

The jobs comment is two sided. Most of the legendary trained staff were let go or offered packages to resign, to be replaced by government subsidized apprentices. That subsidizing saved the firm a lot of money, but could have been behind the spike in warranty claims declared in the subsequent statements.

The Morgan company is the best micro-example of business change in the developed world (from 1995 to date) I have ever come across. As to "the bubble bursting" the thread has to start with fact that all other marques have enjoyed a thrust UPWARD in residuals, anything but languishing, trailing or retreating. Morgan residuals used to lead all others. No wonder to that fact as the cars were relatively rare, easy to maintain/repair and infinitely pretty. So what happened has to be specific to Morgan. What will correct it?

Forgive me all this, I used to be in the turnaround field myself.

L.

When talking of the finances of MMC I'm surprised no one includes the role of the factory tours. I recall being told that the through put in on year amounted to 36,000 (please correct if wrong as it seems rather a lot at 720 per week for 50 weeks) when the cost was 25 GBP. That makes a rather fine 900,000 GBP per year with minimal overheads. Since the cost is now 32.5 GBP for the same number 36k would raise well over a million per year (1.17m). This must be a boon for continuous cash-flow and perhaps explains the investments in the overall visitor experience - building cars it ain't

Here's what the MMC website says: "The Morgan Motor Company welcomes over 30,000 visitors from around the world to tour the factory each year...... Guided tours of the Morgan factory last for around two hours and run Monday to Saturday. Limited to just 18 visitors per tour."

I would suggest the visitors generate far more revenue than that, they also spend in the canteen and the gift shop, although the net profit from those sales will be lower.