The European Investment Bank cannot disburse approved loans until Britain acts as guarantor.
Talks between India’s Tata group-owned Jaguar Land Rover (JLR) and the UK government over a financial aid package for the carmaker have reached an impasse, says a media report.
“Talks between Jaguar Land Rover and the government on a financial-aid package for the carmaker have reached an impasse over the degree of oversight and management control being demanded by Whitehall,” British newspaper the Sunday Times reported.
JLR, which employs 15,000 people, is awaiting government approval for the £340-million loan from the European Investment Bank (EIB).
The EIB gave the green light several weeks ago, but cannot dispense the cash until Britain agrees to repay it, if JLR goes bankrupt, the newspaper said.
Quoting senior industry sources, the report said officials had set out a tough set of conditions for the JLR management, before they agree to guarantee several hundred millions of pounds of loans for the car company.
Also Read
“JLR, owned by India’s Tata, is resisting the demands, the sources said, with some company executives suspecting they are being used as an excuse by the government not to commit to the loan deal,” the newspaper added.
Government sources said last night they were seeking only conventional safeguards, and rejected suggestions the talks were about to end, the report said.
JLR needs the money because of a big drop in car sales triggered by the credit crunch and recession. In March, Jaguar sales were down 30 per cent compared to the same month last year, while Land Rover sales fell 37 per cent.
“Tata, which bought JLR last year for £1.3 billion from Ford, has asked the government to step in and underwrite loans, saying normal commercial lending was not available,” the report said.
Last month, the Sunday Times revealed that the EIB advance was being considered as part of a larger £800 million package, a portion of which the government would guarantee.