JLR secures £340m loan
JAGUAR Land Rover owner Tata Motors today secured a £340m loan from the European Investment Bank to fund research and development into low carbon technology.
The eight-year loan, granted under the European Clean Transport Facility, will help finance development of micro and full hybrid drive trains and research into more energy efficient car bodies.
The pioneering work being carried out by JLR helped to secure the loan because the technology will lead to lower CO2 emissions across Europe.
The loan is structured with guarantee support from several banks, with Credit Suisse taking the lead with JLR and Tata in arranging the structure.
The State Bank of India also played a key role in the facility, providing a guarantee along with Bank of India and Bank of Baroda. Credit Suisse, Standard Chartered Bank, Deutsche Bank and JP Morgan are providing additional guarantees to meet EIB credit requirements.
Ravi Kant, vice chairman of Tata Motors, said: “We are very happy with the support extended to us by the European Investment Bank, State Bank of India, Credit Suisse, and other banks.
“This will support the progress of turnaround in Jaguar Land Rover’s business in challenging market conditions, alongside cost cutting measures, increase of volumes and the improved margins strategy currently being implemented by JLR. We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future.”
Simon Brooks, European Investment Bank vice president responsible for lending operations in the UK, said: “The EIB is pleased to be able to work closely with Tata Motors and Jaguar Land Rover to make a lasting contribution to automotive research that will enable the production of more environmentally friendly and energy efficient vehicles at a time of significant challenges for the European car industry.”
The EIB loan completes the last major element of the funding plan for JLR, which has been an important part of Tata Motors’ efforts to strengthen its group balance sheet over the past year.
In 2009, the company secured over £500m of funding for JLR from State Bank of India, Standard Chartered Bank, Bank of Baroda, ABC International bank, GE Capital, and Burdale Financial, a subsidiary of the Bank of Ireland.
Moreover, despite the very difficult financial environment since June 2008 when Jaguar Land Rover was acquired, Tata Motors had, by October 2009, completely repaid the $3bn bridge finance facility used to acquire JLR from Ford.
Commenting on the overall financing efforts being made by Tata, Mr C Ramakrishnan, the company’s chief financial officer, said: “We have taken significant steps to meet our financing requirements and strengthen our balance sheet over a short timeframe in challenging and adverse market conditions.
“We are thankful to have received the support of Tata Sons, all investors and relationship banks. The business performance of our Indian and international operations have improved significantly and we feel comfortably positioned for the future.”
