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Jaguar Land Rover near collapse?

By Samantha Stevens, 08 May 2009 Industry

Jaguar Land Rover near collapse?

JLR and Tata warn the British Government: no loan guarantee, no guarantee of existence.

Jaguar Land Rover needs money. While this is a common cry at present (from the Wheels office to the rest of the world), the carmaker may be forced to slash plants and jobs if a deal with the British government cannot be immediately reached.

When Indian company Tata bought the Brits last year, it was seen as the saviour for the brand. But not long after the sale, rumours about financial problems started to swirl.

Tata has this week revealed that it needs a £340 million loan from the European Investment Bank and a £400 million financial package from the Royal Bank of Scotland and Lloyds Banking Group. But the British government have placed a hard set of conditions on the repayment and terms of the loan - obviously startled by the billions that the US government have thrown at the Big Three, never to be seen again...

The terms include the ability to choose the chairman and an official seat on the board, final say on all company decisions, a promisee of a further £300 million into JLR after the crisis subsides, and ironically no further British worker cuts. Around 15000 Brits work for the conglomerate, and 450 jobs were cut at the start of the crisis.

The government will only go guarantor on £175 million, and charge £26.25 million in interest, despite announcing a multi-billion pound assistance scheme at the start of the crisis to guarantee loans to struggling car companies.

The Department for Business said Tata has to take responsibility for its purchase.

"Any Government financial assistance must protect taxpayers' money," said a spokesperson.

"But on this basis we are prepared to help although not on any terms. We regard JLR as a viable company with good long-term prospects."

The British government said on Wednesday that talks are continuing despite the rumours of a stall.