Press Report : Citigroup steps in to help Tata
Dominic O’Connell, The Sunday Times, 11th January, 2009
INDIA’s Tata has recruited the American bank Citigroup to advise it in its talks with the government over state assistance for Jaguar Land Rover, the carmaker.
Discussions between officials and advisers on both sides are expected to resume this week, as Tata seeks a short-term bridging loan to help it with cash-flow problems. Sales of Land Rovers in particular have been hard hit by the credit crunch.
Those familiar with the negotiations said yesterday that they did not foresee a speedy resolution, despite Tata having raised the matter with government in November. There is also disagreement over the nature of the talks, with sources close to the government saying Jaguar Land Rover does not appear to be in urgent need of a cash injection.
Sources close to Tata, however, believe the government is close to approving a £500m bridging loan. Tata bought Jaguar Land Rover from Ford last year for $2.3 billion (£1.5 billion) – a deal on which it was advised by Citi.
The Indian company, led by Ratan Tata, has urged the government to provide financial support similar to that given by other European governments, highlighting Jaguar Land Rover’s extensive investment in research and development in Britain.
Yesterday the German government said it planned to lend about €1.8 billion (£1.6 billion) to Opel, the German unit of General Motors. It is also understood to be considering a similar loan to Ford’s German operations. The Swedish government has already said it will provide aid to Saab and Volvo, the local units of GM and Ford, respectively.
Meanwhile, Lord Mandelson, the Business Secretary, is under renewed pressure to provide a loan scheme to support the wider British car industry. Nissan, which operates the largest car plant in Britain, last week said it would lay off 1200 staff, a quarter of its workforce.
The Society of Motor Manufacturers and Traders has urged Mandelson to provide guarantees to car-finance groups in a bid to stimulate demand. On Wednesday, Mandelson will give evidence to the Commons business committee on the state of the car industry.
[Source: The Sunday Times]
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