Workers at troubled van maker LDV have agreed to take a 10% pay cut to support a planned management buy-out (MBO).
The management buyout team also said it hoped to restart production at the company’s plant in Birmingham, central England, on April 6. Production was halted in December and LDV, owned by Russian vehicle maker GAZ, has said it was running out of money.
Erik Eberhardson, head of the MBO team, said: “I am confident that when we complete the MBO and secure the funding we need, we can then focus all our efforts on making this business something that we can all be immensely proud of. This latest news is one of a number of steps being taken to improve the business plan for potential investors. I am now more confident than ever that the management buy out is the best solution for LDV, the economy, the workforce and all LDV’s valued business partners”.
Eberhardsen said earlier this week that planning for both the MBO and the discussions to secure the future funding are ‘progressing well’.
The British government last month turned down a request for a short-term loan of up to GBP30m ahead of a management buy-out, saying that the main responsibility for supporting the company was with owner GAZ.
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LDV Chief Executive Evgeniy Vereshchagin told workers that LDV planned to restart production on a three-day working week, with 200 vehicles to be manufactured each week. This could rise to 250 per week depending on demand.
GAZ, controlled by oligarch Oleg Deripaska, has been hit by falling demand in Russia and has been seeking to restructure part of its debt.
GAZ Group technically defaulted on 5 billion roubles worth of bonds in February and has admitted that it is having difficulty servicing its debt. The company says it is responding to the financial crisis by cutting ‘unprofitable products’.
