The UK Government today welcomed news that Tata has secured private sector funding for Jaguar Land Rover’s (JLR’s) short term financial needs and that UK Government support for the car manufacturer is not now needed.
Tata Motors has reportedly managed to secure a debt facility of GBP175m for its JLR operations, by mortgaging the stock and receivables of Land Rover. A three-year loan has reportedly been extended by Burdale Financial, a member of the Bank of Ireland Group.
The Jaguar and Land Rover brands have been struggling to meet working capital requirements as falling demand for luxury cars due to global economic slowdown has hit sales. JLR had reported a loss of GBP281m in the ten months ending March 2009.
Tata and The British Government had been locked in negotiations on financial support for JLR, with Tata reportedly unhappy with British Government conditions that would be attached to any UK Government funding or guaranteeing of loans.
But it would appear that financially hard pressed Tata has opted to go down the private sector route to secure immediate financial support for JLR.
UK Business Secretary Peter Mandelson said: “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.
“This additional funding will allow JLR to invest in future models and successfully launch the new XJ saloon on schedule and updated Land Rover models later this year.
“The Government had offered bridging finance from the Automotive Assistance Programme if necessary. We understand the Tata group will now be successful in resolving longer term financial needs but we are willing to help again if necessary.
“This is a good and encouraging outcome for JLR, its workforce and its supply chain.”
The UK Government’s Automotive Assistance Programme has met widespread criticism for delays in the flow of funds to companies.
Tata Motors said in a statement that it and JLR also expect that the long-term loan from the European Investment Bank (EIB) of GBP340m, sanctioned to Jaguar Land Rover, can also be successfully secured in the coming weeks ‘through appropriate commercial arrangements’.