The timing could not have been more cruel. For years, the workforce at TVR, the Blackpool-based maker of iconic, muscular sports cars, had been cut and cut again. Staff knew the company was in crisis. But on the Friday before Christmas came the final, devastating blow.
The 200 workers who remained from a labour force that had once numbered almost 1,000 were told that their employer was in administration. Salaried staff would not be paid their wages for December. Nobody would receive the holiday pay they had been banking on to carry them through Christmas and New Year. TVR had reached the end of the road in Britain.
And now it has emerged that the man once trumpeted as the firm’s saviour had quietly walked away just days before the carmaker’s collapse.
It was an agonising finale to a saga that began with a note of optimism two-and-a-half years ago. In July 2004, TVR was sold by Peter Wheeler, the eccentric millionaire who had dominated the company for almost a quarter of a century. The buyer was Nikolai Smolenski, a Russian by birth but who gives his nationality as Greek or British. At the time he was 24 years old, but, in the words of one TVR worker “looked like a 15-year-old schoolboy”.
Young he may have been. But Smolenski declared that TVR “represents all that is best in British engineering and ingenuity, and I really want to see what it can do with some extra resources behind it”. And crucially for the investment-starved firm, Smolenski had money — or at least, his father Alexander did.
Smolenski senior had made a fortune amid the chaos of post-communist Russia but he suffered a setback in 1998 when his banking empire, SBS-Agro, collapsed during the financial crisis that hit the country that year. Many of the bank’s depositors were left with nothing. Alexander Smolenski was accused of having transferred assets into other companies ahead of the collapse — something he always denied. He dismissed his foreign creditors’ protests in bizarre terms. They deserved nothing more than “dead donkeys’ ears”, he said at the time.
The bank’s collapse ruined many of its depositors: its debts were put at nearly £600m. But Alexander’s fortune was secure. He was able to ensure that the young Nikolai — raised as “a sworn enemy of communism”, according to his father — could afford the sort of lifestyle that befits the son of a Russian oligarch.
From the ruins of SBS-Agro, Alexander launched a new banking group, First OVK. In 2003, this was in effect handed to Nikolai, who declared it would triple in size to 1,500 branches. That ambition was never achieved. Just two months later, he sold the business for an estimated £80m.
Nikolai was well established in Britain long before he bought TVR. His father had paid for him to be educated in Austria and the UK. While still in his early twenties, Nikolai and his young wife Olga bought a seven-bedroom house complete with swimming pool and surrounded by half an acre of grounds in Highgate, north London. He had a private jet — plus a collection of flashy cars. He bought his first TVR sports car just a couple of days before announcing his takeover of the Blackpool company.
In the weeks after the young Russian bought the business, staff at the TVR plant felt reassured. “When he first arrived, things seemed very good,” recalled a bodyshop worker. “It looked like he could be our saviour.”
When he addressed the workforce “he spoke incredibly softly, and if you weren’t in the front row you couldn’t hear a word”, said another employee.
Smolenski insisted that he was committed to the business and, crucially, that he was prepared to invest in it.
The baby-faced oligarch liked to portray himself as TVR’s rescuer.
“After he arrived, he said that when he bought the company, it had been within two weeks of closing,” said someone who dealt with the Russian. “He even talked about introducing a pension scheme, something we’ve never had.”
In an attempt to improve the Blackpool workers’ diet, Smolenski ordered that boxes of fruit should be delivered and left around the plant so employees could help themselves. “He is reckoned to be a bit of a health freak,” said one shopfloor worker.
Smolenski might have known about the benefits of eating fruit and vegetables. But in his designer suits and polished shoes, he never looked like a man who was going to get dirt under his fingernails.
When the accounts for 2004, the year of Smolenski’s takeover, were published, they painted a grim picture.
TVR tried to sound upbeat. “Following the change of ownership in July 2004, a substantial commitment has been made by the new shareholder to place the group on a secure footing,” it said.
But that couldn’t disguise the fact that the company showed a 2004 loss of nearly £11.7m on sales of just £17.2m — equivalent to losing £34,000 on the sale of a £50,000 car. Part of the loss was explained by an £8m write-off in the value of stocks.
Crucially, TVR said Smolenski had given assurances that “continuing funding will be made available to support the group’s future growth”.
To his credit, Smolenski ordered that TVR should address some of the quality-control problems that continued to dog its cars: he delayed the launch of the £54,000 Sagaris — capable of accelerating to 60mph in 3.7 seconds — to make sure teething problems were ironed out.
But there was precious little sign of the investment from Smolenski that might have dragged the shambolic collection of buildings that make up the TVR factory into the 21st century.
Nigel Gordon-Stewart and David Saxton — veterans of the sports-car industry with Lamborghini and Lotus respectively — were brought on board in an effort to pep up the operation, but they lasted only a short time.
Car bodies continued to be trundled from one side of the works to the other on trolleys. The plant — in effect a number of sheds plus an old laundry on a site near a municipal dump on the northeast side of Blackpool — became “more and more decrepit and run down”, said one employee. There was scarcely any use of computers or other high technology.
BY the spring of last year, production of TVRs had fallen to fewer than 10 cars a week. Shortages of engine parts and raw materials for bodies held up what limited production there was.
Tellingly, less and less was seen of Smolenski. Every few weeks he would fly into Blackpool airport on his private plane and be collected — in a TVR, of course — to be taken to the factory. But those visits became more infrequent. In April, TVR announced that it would be closing its old Blackpool factory. But that wouldn’t mean the end of the marque, it said — the cars would simply be built elsewhere, with the vague promise of maintaining a “British presence”. Sales director Jason Oxley even went as far as to offer the preposterous vision that TVR would become “another Aston Martin, selling thousands of cars a year”.
There were layoffs at Easter. Then in October, with production at a virtual halt, a further 150 workers were laid off. Since then, only about 100 people have been going into the plant each day. “We were just sitting around playing cards and watching DVDs,” said Dave Gillespie, a union convener. “It was absurd.”
Over the months, Smolenski came up with plans to move production to another site in Blackpool. Then to Italy. Then he relented and said TVRs would continue to be built in Britain. “But nobody was under any illusion about how this was going to end,” said Gillespie.
The really bizarre twist emerged only when the administrator, PKF, was appointed just before Christmas.
Smolenski — who had quietly sold his London house for £7.7m last summer and moved to Vienna — had split up TVR into a number of different businesses.
Only part of the group — the manufacturing arm, newly named Blackpool Automotive — was in administration.
Staff discovered that Smolenski had resigned as a director of Blackpool Automotive on December 13 — less than 10 days before the administrators were called in. The Russian no longer owned the manufacturing arm of the business he had declared he wanted to save.
Company records show that on the same day, December 13, Mike Penny, TVR’s long-standing production director, also quit as a director of Blackpool Automotive.
The two men were replaced by Smolenski’s personal assistant Roger Billinghurst and Angelco Stamenkov, 25, who says he is an Austrian national despite his Russian name and who, like Smolenski, gives as his home an address in Vienna.
Smolenski and Stamenkov could not be contacted last week. Messages for Billinghurst were not returned.
David Oxley, managing director of TVR Motors — which is still owned by Smolenski — confirmed this weekend that Blackpool Automotive was recently sold. Oxley would not name the buyer, but confirmed that Smolenski was no longer the owner.
Another part of the business, TVR Power, which supplies parts and spares, had previously gone to a management buyout.
The sale of the two businesses means that the remaining parent company, TVR Motors, is left with the TVR marque and intellectual property rights.
“TVRs will continue to be produced,” said Oxley, “but not in Blackpool.” He would not comment on speculation that production will be moved to the Bertone plant in Italy.
On the face of it, Smolenski’s sale of the production side of TVR just before it went bust achieves his aim of holding on to the name and moving production offshore without the hassle and expense of closing down the Blackpool plant.
But he may face two obstacles. First, there are strict rules covering the disposal of businesses: a loss-making offshoot cannot be simply off-loaded in the expectation that it will promptly go bust. The buyer has to give an undertaking that the acquired business can meet its liabilities. And second, the Transport & General Workers’ Union is putting pressure on Smolenski to foot the full cost of redundancy and holiday pay owed to the staff who remained when Blackpool Automotive went under: this is thought to total as much as £3m. By the middle of last year, Smolenski was reckoned to have shelled out almost £30m on TVR, including the sum he paid Wheeler. The bill is now reckoned to be approaching £40m. Meeting redundancy costs will push that even higher. The baby-faced oligarch may find it much harder than he thought to shed the legacy of TVR.
The man behind the glory days
PETER WHEELER, who built up TVR before it was sold to Nikolai Smolenski, was the man who liked the car so much he bought the company.
He purchased his first TVR well before he took over the company in 1981 because he liked fast motoring and hated buying foreign cars.
Wheeler was 37 when he took over. He was a Sheffield grammar-school boy who had made modest sums playing poker while at Birmingham University and went on to make a fortune as a chemical engineer, building and selling a business serving the North Sea oil industry.
Wheeler could have retired. But instead, he took over TVR, then producing about 170 cars a year.
The marque had already secured its reputation for raw power, a car for real men. At the 1971 Earls Court motor show, before the term political correctness had even been invented, two naked models draped themselves over the cars on the TVR stand. A fight broke out among photographers as they jostled for the best shots.
Under Wheeler, TVR hit the big time with the Griffith, launched in 1990. It looked ravishing. Its V8 engine propelled it to more than 150mph.
It could out-accelerate a Porsche 911, yet cost only half as much. Aficionados loved the car’s sheer power and back-to-basics appeal.
In the late 1990s, TVR production reached 40 cars a week. Wheeler knew the TVRs down to their last cotter pin, and was intimately involved in developing new cars. His huge, 6ft6in presence dominated TVR.
When designing a new car, polystyrene models would be cut, crafted and trimmed until Wheeler liked the shape. Once, his pet spaniel Ned bit a lump out of a model that was to become the TVR Chimaera. Wheeler liked the dog’s impromptu modification, so a matching chunk was carved out of the other side of the model. The two indentations eventually housed the Chimaera’s indicators.
For a time, TVR was successful. In 1998, sales topped £50m and profits reached £2.6m. In 2001, as the Griffith was finally pensioned off, the company boasted a new range of cars — the Cerbera, Chimaera, Tamora and Tuscan. John Travolta drove a TVR Tuscan in Swordfish, a 2001 Hollywood action movie. (Rather less glamorously, a Tuscan also appeared in a 2004 Bugs Bunny film, Looney Tunes: Back in Action.) But the few years straddling the millennium were exceptions. For most of TVR’s 60-year history, it has done little more than limp along.
By 2003, TVR was back in the red. And in the summer of 2004, Wheeler sold up — pocketing a reported £15m from Smolenski — to spend more time with his second wife, Victoria, and their two young daughters at his estate near Clitheroe in Lancashire.
