15 Oct 2012

London cab maker in trouble

10:25 am on 15 October 2012

Manganese Bronze, the maker of the London cab, is in deep trouble.

Shares were suspended in Friday suspended following a decision by the company to halt sales and recall 400 taxis, citing a defective gearbox.

The problem, affecting the vehicle's power steering, was first picked up two weeks ago.

The company said the recall would affect its cash flow and is now examining its options, which include going into administration.

Manganese Bronze currently has £11.4 million in net debt from HSBC and Lloyds, as well as from Geely, a joint venture partner in China.

The BBC reports the company was already in financial difficulty before the latest problem emerged.

Sales have been in decline. It sold 1502 taxis in Britain last year, compared with 1653 in 2010, a fall of 9.1%.

In January, Manganese Bronze issued a profit warning, saying that it made no profit in 2011 and could fall short of expectations this year.

Shares were last quoted on the stock exchange at 10 pence each, down from 35p a year ago.

Manganese and Geely signed a joint venture agreement in 2006 and own a factory in Shanghai that produces taxis for the international market.