The facility is an eight year amortising loan to finance development of micro and full hybrid drive trains and research into more energy efficient car bodies for the premium car segment by JLR.
Tata said that these activities will contribute to lower CO2 emissions and the loan was granted under the European Clean Transport Facility.
The loan is structured with guarantee support from banks, with Credit Suisse ‘working in the lead’ with Jaguar Land Rover and Tata Motors in arranging the structure. State Bank of India 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.
Mr. 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 Jaguar Land Rover. We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future.”
Mr. Simon Brooks, European Investment Bank Vice President responsible for lending operations in the United Kingdom, 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. In 2009, the company secured over GBP500m of funding, including facilities from State Bank of India, Standard Chartered Bank, Bank of Baroda, ABC International bank, GE Capital, and Burdale Financial Limited, a subsidiary of the Bank of Ireland.
Tata Motors said that despite the ‘very difficult financial environment since June 2008’ when JLR was acquired, Tata Motors had, by October 2009, completely repaid the USD3bn bridge finance facility for the acquisition, through a combination of Rights Issue in 2008, issue of long maturity Non-convertible Rupee Debentures, internal cash flows, sale of investments, and issue of Global Depository Shares and Convertible Notes in October 2009.
Commenting on the overall financing efforts being made by Tata Motors, Mr. C. Ramakrishnan, Chief Financial Officer of the company, 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.”