JLR lines up its own funding
JAGUAR Land Rover’s Indian owners have secured financial backing for the group from foreign banks after describing the government’s aid package as “onerous”.
The carmaker, which employs 14,500 people, with 2,000 at Halewood on Merseyside, had asked the government for a guarantee to back up to £500m of UK bank lending plus a further guarantee to enable it to tap into £340m from the European Investment Bank.
Business secretary Lord Mandelson offered a £175m bridging loan but Rajan Tata, head of Jaguar’s parent company the Tata Group, said the terms of the deal were, “very onerous and hence unacceptable”.
Tata is now arranging an alternative with overseas commercial lenders. The State Bank of India, part-owned by the Indian government is understood to be providing guarantees.
Jaguar first approached the government for help last year after experiencing a sharp decline in sales. Numbers were down 32% in the 10 months to March 31, 2009.
The number of vehicles sold fell to 167,000 from 246,000 a year earlier, as worldwide demand fell sharply due to the recession.
Tata bought Jaguar Land Rover for £1.7bn in March 2008 from Ford.
