Jaguar Land Rover has declared itself safe and without the need for state aid following the secure of a £175m funding package from private sector lenders.
The British company, owned by Indian firm Tata, employs around 14,000 staff at its plants in the Midlands and on Merseyside. The immediate future of those workers is now in the clear following the award of the short term funding, JLR said.
The company is still angling for the backing of a £340m loan for new model development which has already been agreed in principle with the European Investment Bank (EIB). Whitehall was ion talks to act as guarantor for the funding and it would have come out of the £2.3bn that government said it will set aside for such deals when it announced its Automotive Assistance Programme at the beginning of the year.
But negotiations on that package have stalled, with government attempting to impose terms on the deal – like installing its own chairman – which Tata has found unagreeable. Government have also attempted to halve the amount of money it secures. In fact, no loans at all have actually been secured through the aforementioned AAP scheme to date.
However, Tata now thinks it can get commercial banks to underwrite the £340m long term loan as well as the short term money which it today announced.
“Tata Motors and Jaguar Land Rover also expect that the long-term loan from the European Investment Bank (EIB) of £340 million, sanctioned to Jaguar Land Rover, can also be successfully secured in the coming weeks through appropriate commercial arrangements,” the firm’s statement.
Peter Mandelson said this latest development was a “good and encouraging” one.
“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,” said the Business Secretary.
“The Government had offered bridging finance from the automotive assistance programme if necessary,” he added. “We understand the Tata group will now be successful in resolving longer-term financial needs but we are willing to help again if necessary.
Two Jaguars and two Land Rovers were recently named in the top ten least reliable cars available in the UK by Which? in the consumer advice magazine’s 2009 car survey. The Jaguar XF and S-Type were named third and ninth least reliable respectively while the Discovery and Freelander were fifth and sixth. The most reliable car is the Honda Accord, as per the research.