London Cab Maker Seeks Administration as Funding Dries Up

Iconic London Cab Maker Seeks Administration as Funding Dries Up
A passenger speaks with a London taxi driver at Waterloo station in London. Photographer: Chris Ratcliffe/Bloomberg

Oct. 22 (Bloomberg) -- Manganese Bronze Holdings Plc, the maker of London’s iconic black taxis, will try to restructure in administration after failing to secure the necessary money to continue operations.

“Discussions with various parties to secure funding on acceptable terms to address the group’s financial needs have proved unsuccessful,” the company said in a statement today. “The board has therefore concluded that the group is no longer a going concern.”

Manganese, which has built more than 100,000 taxis since 1948, struck a deal in 2006 with Geely Automobile Holdings Ltd. to buy components and body parts from the Chinese company in Asia for assembly in the U.K. The tie-up was intended to help cut costs and ensure the U.K. company’s long-term survival.

The black taxis, known as Hackney cabs because of their origin as carriages drawn by French Haquenee horses, feature 25-foot turning circles, as required by London’s Public Carriage Office in the early 20th century, to enable exits from taxi-waiting queues in the middle of the street or tight spaces such as the Savoy hotel forecourt.

The taxi-maker had been seeking additional funding of around 15 million pounds ($24 million) from Geely and other unidentified parties, Nick Hasell, spokesman for the company, said by telephone. The talks broke down overnight on Oct. 20 as terms couldn’t be agreed, he said, adding that the company is seeking “tens of millions” in the medium-term.

Share Suspension

PricewaterhouseCoopers LLP is likely to be appointed as the administrator in the coming days, Hasell said.

Trading of the shares was suspended Oct. 12 when Manganese announced a taxi recall, prompted by a fault in the steering box. The company, which has 300 employees at its Coventry, England plant, has forecast it will sell more vehicles this year overseas than at home for the first time, after selling 1,502 in the U.K. and 705 abroad in 2011.

Manganese shares stood at 10 pence at the close of trading on Oct. 11, before the suspension, and have fallen 69 percent this year, giving the company a market value of 3 million pounds.

The British government should provide support to the troubled carmaker if necessary, Roger Maddison, a representative for the Unite union, said in an e-mailed statement.

Manufacturing Heritage

“The black cab is part of Britain’s car manufacturing heritage and we expect the company and the administrators to do everything possible to secure the future of this Coventry-based company,” Maddison added.

The automaker’s priority remains resolving the recall of 400 London taxis, the company said in today’s statement.

“What really frustrates us is that we were aware of this problem in August and they were still selling vehicles this time last week,” Darryl Cox, secretary of the London Cab Drivers’ Club, said by telephone. “The product coming out of China is very poor really, they’ve had one problem after another.”

The association has a meeting scheduled this week with London Mayor Boris Johnson as it hopes to postpone by one year legislation which bans taxis made more than 15 years ago from service, Cox said. That would temporarily plug the gap caused by the recall until new taxi models manufactured by Nissan Motor Co. reach the market, he said.

Increasing Pressure

Geely took a 20 percent stake in the British company and holds rights to sell the black cabs in China and some other Asian countries. Manganese has planned in 2014 to introduce a new sedan-style taxi as part of the joint venture. The British company also has said it intends to serve as Geely’s distributor when the Chinese company starts exporting cars to the U.K.

Manganese has come under increasing pressure from competitor Eco City Vehicles Plc, which supplies the Mercedes Vito to London taxi drivers, in recent years. The London-based company, whose deliveries increased 116 percent to 324 vehicles in the first half, estimates it supplies 38 percent of London cabs, Chief Financial Officer Peter DaCosta said in an Oct. 12 telephone interview.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net