Press Report : Tata fury at conditions of Government’s loan to JLR
John Cranage, Birmingham Post, 6th May, 2009
Jaguar Land Rover is facing a fresh crisis amid accusations that the Government has turned its back on the luxury carmaker. Its Indian owner, Tata Motors, is understood to be refusing to accept tough conditions imposed by the Treasury on the loans it needs to stay on the road during the recession and credit crunch.
These include severe restrictions on the Government’s willingness to underwrite a £340 million loan offered by the European Investment Bank to partly financing JLR’s long term development of new eco-friendly cars. The Government is also believed to be demanding that Tata – which is itself struggling to raise money on the international capital markets – pump in hundreds of millions of pounds more into JLR on top of the £900 million it has already committed since taking over the company from Ford last year.
Ministers are also said to be demanding a high level of management control of JLR in exchange for cash – including the right to choose a Chairman and to have a permanent seat on the management board. Tata is not commenting on speculation that its prolonged talks with the Government have stalled. However, a source familiar with the situation, said: “This looks like an offer designed to be rejected because of extortionate conditions.”
Ministers are also said to be demanding a high level of management control of JLR in exchange for cash – including the right to choose a Chairman and to have a permanent seat on the management board.
Analyst Howard Wheeldon, of BGC Partners, said: “Given just a few hours to agree to ridiculous government terms, Tata are absolutely right to be furious at the sleight of government hand. This latest government failure to support the future of the UK economy is in my view an asbolute disgrace – tantamount to throwing the best of the best of the of the highly valuable British luxury car industry and export potential into a den of wolves.”
In March, Tata Chairman Ratan Tata already frustrated at the lack of progress over securing short term aid for JLR, launched an unprecedented attack on the UK Government.
Failure to secure the emergency liquidity the business needs in the absence of normal bank funding could result in further cutbacks at the company, which has already axed jobs and reduced production volumes.
A spokesman for JLR said: “Our position has not changed. When we started discussions with the Government we knew there would be hiccups and delays and that the talks would be complex and would take time. These talks are ongoing and progress is being made.”
[Source: Birmingham Post]
[Editor’s Note: The Birmingham Post has now published an article by Howard Wheeldon of BGC Partners headlined Treasury throws Jaguar Land Rover to the wolves which AROnline readers can access via the preceding link.]