Tata, the Indian owner of Jaguar Land Rover, has dropped its demand for financial support from the British government after obtaining private sector funding worth 203 million euros for the struggling carmaker.
AFP - India's Tata Motors has secured private funding for its British luxury carmaker Jaguar Land Rover, meaning the firm will no longer be seeking state help, the group said on Tuesday.
Tata Motors, which bought JLR last June, said it has secured 175 million pounds (203 million euros, 288 million dollars) of funds from the private sector. It had first approached the government for funding in September.
"Tata Motors and JLR have been in discussions with commercial banks for JLR funding facilities, many of which have been successfully concluded in the last few months and the balance is expected to be completed in the coming weeks," they said in a statement.
"Tata Motors and JLR also expect that the long-term loan from the European Investment Bank of 340 million pounds, sanctioned to JLR, can also be successfully secured in the coming weeks through appropriate commercial arrangements.
"With the positive trend in the external environment in financial markets and improvement in general liquidity, these arrangements have been and are expected to be concluded without necessitating guarantees from the UK government, for which discussions had been ongoing for some time."
Tata Motors completed its 2.3-billion-dollar acquisition of JLR from the Ford Motor Co. in June last year. The ailing US carmaker sold the brands to focus on turning around its North American operations.
Some 2,000 people have been laid off at JLR in recent years, with plants shut down and sabbaticals given to staff.
Trade unions have been pushing for more government support for JLR which employs about 15,000 people in the country, as the global economic downturn puts the brakes on car sales and demand.
Business Secretary Lord Peter Mandelson welcomed Tuesday's announcement.
"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," he said.
"This additional funding will allow JLR to invest in future models and successfully launch the new XJ saloon on schedule and updated Land Rover models later this year.
"The government had offered bridging finance from the automotive assistance programme if necessary. We understand the Tata group will now be successful in resolving longer-term financial needs but we are willing to help again if necessary.
"This is a good and encouraging outcome for JLR, its workforce and its supply chain."
Date created : 2009-08-11