Press Report : LDV set to resume production after Weststar rescue
Graeme Brown, Birmingham Post, 18th May, 2009
LDV is set to resume production by July following a last-ditch rescue of the Birmingham van company by Malaysian company Weststar. A takeover deal – for an undisclosed sum – is in the process of being finalised according to Weststar, which has been negotiating to buy the Russian-owned manufacturer since it applied to go into administration.
LDV suspended production in December as demand for its Maxus vans and trucks slumped in the recession. Its parent company, GAZ Group, the Russian commercial vehicle manufacturer, put it up for sale after running into severe financial problems itself.
The deal with Weststar, however, is believed to be subject to due diligence, the completion of financial arrangements and various approvals. “After completion, Weststar intends to continue production and research at the Birmingham facilities, using best practices including the highest standards of labour and energy efficiency in the country,” Weststar said in a statement. In addition to production, Birmingham will remain as LDV’s ‘centre of engineering excellence’.
An application to the High Court by LDV for administration is expected to be withdrawn today but, although Weststar says it is committed to maintaining production at the Washwood plant, redundancies among the company’s 850-strong workforce are still expected as production volumes match a commercial vehicle market in which sales are 45 per cent down.
Weststar imports LDV vehicles into Malaysia in kit form for assembly and sale in Far Eastern markets and it has plans to expand that operation. The company’s statement continued: “This strategy will see employment and value creation in the UK and Malaysia significantly increased over time.”
After completion, Weststar intends to continue production and research at the Birmingham facilities, using best practices including the highest standards of labour and energy efficiency in the country,” Weststar said in a statement. In addition to production, Birmingham will remain as LDV’s ‘centre of engineering excellence’.
Weststar went on to thank LDV suppliers, dealers and other creditors for their support, which was essential to a successful conclusion of the deal. “Weststar hopes to have LDV production re-started by July, 2009,” the statement added.
Meanwhile, it emerged that LDV directors had written to suppliers asking for continued support as talks progress over a sale to Weststar. LDV said it would be able to apply for government funding in the coming weeks but would not receive a lump sum of £5 million as reported by some media organisations.
In a letter seen by the Birmingham Post, Purchasing Director, Chris Shoesmith, called for “continued support” from suppliers, and said the government funds cannot be used to pay creditors.
The letter states: “LDV will be able to apply for funds as required to cover only the essential overheads for the next few weeks, not to repay existing creditors. They will enable the business and workforce to remain in place to achieve the completion of the sale of LDV as a going concern. The sale as a going concern is in the best interests of all of the creditors for LDV, e.g., suppliers and dealers, and we therefore clearly ask for your continued support to achieve this. We are still finalising arrangements with the Government on how their support will be administered which we expect to be concluded this week.”
LDV PR and Marketing Director, Guy Jones, said the bridging loan would be used for essential needs to keep the company running, like paying for electricity and wages.
[Source: Birmingham Post]