Friday, August 14, 2009
Jaguar Land Rover secures funding
The Indian owner of Jaguar Land Rover has told the UK government it no longer needs support for the carmaker, after obtaining private funding.
Tata said it had secured some direct bank loans, as well as guarantees that would allow it access to a £340m European Investment Bank loan.
Government funding had been offered but did not materialise, after a failure to agree terms of any cash injection.
Business secretary Peter Mandelson said the development was "welcome".
"The fact that the banks and commercial capital markets are meeting JLR's funding is a clear sign of confidence in the company, its products and the automotive sector," Lord Mandelson said.
He added that the additional funding would allow investment in future models and for the XJ saloon to be launched on schedule.
"This is a good and encouraging outcome for JLR, its workforce and its supply chain," he added, saying the government had offered bridging finance, and would be "willing to help again if necessary".
In a letter to Lord Mandelson, Tata chairman Ratan Tata said he hoped the funding that had been secured would help it "succeed in re-establishing these venerable British brands to their earlier glory".
'Onerous' terms
Tata bought Jaguar Land Rover for £1.7bn in June 2008 from Ford.
It currently employs 14,500 people, having made 450 redundancies at the start of the year.
The firm is based in Gaydon, Warwickshire, and has factories in Castle Bromwich and Solihull, in the West Midlands, and Halewood, on Merseyside.
It has seen a sharp fall in vehicle sales following a worldwide drop in demand.
Mr Tata said that the terms of a £175m bridging loan which had been offered by the government had been "very onerous and hence unacceptable".
However he accepted that it was right that the business department had wanted to be satisfied that the firm was sustainable, and to get an idea of how much was required to meet its needs.
DATED: 14.08.09
FEED: AW
