I was aware BL cars had budgeted £1.6m-£1.8m in redundancy costs for a full closure of Rearsby. There would be additional costs associated with resourcing all the assemblies to other suppliers and site closure costs.
Of course, if the site could be sold, some of these costs would be recouped. David Haggart advised me to offer BL £1. Frankly, he said, that's all it's worth. The liability, in particular in terms of employee redundancy costs was £1.8m.
I took David to Portman Square, HQ of BL in London. Here we met one of Sir Michael's main board of directors, William Pratt-Thompson, who had been delegated the role of determining if a Rearsby MBO was possible, practical or even viable. After some background and scene setting, I offered the £1 - pointing out the considerable redundancy, resourcing and closure costs BL faced.
Pratt-Thompson asked to be given time to consider the offer. We withdrew and the meeting adjourned. The adjournment room telephone rang and Pratt-Thompson spoke to me: "Get rid of that lawyer. He's going to mess things up" - I knew I had the right man with me!
Pratt-Thompson asked to see me alone.
"Ivor, Rearsby may well be worth £1. But, BL is owned 99.997% by the taxpayer. Whilst I am the main board director, I am simply an employee, exactly the same as you. Can you imagine what the media and MPs would make of one BL manager selling to another BL manager, a taxpayer owned asset for £1! They would have a field day. In reality, even though it may be worth a pound or even less, I cannot do it. You have to come up with something viable I can recommend to the board. Otherwise, politically, it's best to close Rearsby.
"I thought the argument put forward had credence. I didn't debate the common sense thrust of what he had laid down as the reality of the matter. Having closed household name plants such as MG and Triumph very recently, I was aware the BL board wouldn't flinch in closing little Rearsby. Not for a second. I said I would consider what he said and come back to him.
I was surrounded by people trying to put numbers together, attempting to come up with a calculated valuation. I wasn't taken with this. Was there such a value in the real world? I was certain there was not, however much the bean counters pretend there is. This was a case of achieving a situation where we had a willing buyer and willing seller. Nothing more. QED. No different to buying in the Arab bazaar. This was not a case of calculating and adding up minutia of detail. Such calculations may be useful as benchmark, but that was it.
I put the following thought to David Haggard "What is the lowest common denominator figure discussed by the BL board? or what is a BL ‘basic unit’?” Haggart look perplexed. I an-swered my own question "It's £1m. That's a BL 'basic unit'. BL sales are £3,000m. A figure less than a “basic unit’ doesn't get any attention whatsoever. Nil. Zilch. Zero. Therefore, whatever we offer must be a multiple of a basic unit!"
My MBO team and I discussed and agreed a BL basic multiple offer, based around my thinking, but with 25% of the offer deferred for three years. The latter made the headline offer bigger in the opposite party's mind, at the same time, giving us time to raise it.
Mark Snowden, Commercial Director BL Cars, was directed to negotiate with us. We invited him down to see Rearsby for himself. He'd never been. I judged him to be a somewhat strange detached person. I distinctly got the impression he had better things to be doing. Not someone I could easily relate to. Following brief introductions, I came straight to it and put our offer to him. He said OK, and disappeared! Someone who was present later informed me, the matter received the same amount of time and attention at the following BL board meeting. Job done.
Game on!
Some years later, David Haggart stated he had used that idea of 'what is the basic unit' in various circumstances and situations with great success. Praise indeed from the MBO king! Regrettably he died quite young, well before his time.