Lifeline for LDV as investors agree to fund most of emergency loan
Birmingham van-maker LDV has found two investors to fund most of the emergency loan the company needs to survive.
But the firm says the Government still needs to put up some of the cost – and is looking to arrange a meeting in the next 24 hours to try to hammer out a deal.
Industrialist Erik Eberhardson – who is looking to arrange an MBO of the Washwood Heath firm – had originally said the firm would need an emergency loan of between £20 million and £30 million from the government to keep it going. But this request was cut down to £4-5 million after the two investors – who cannot yet be named – stepped in.
Business minister Ian Pearson has said the government would not be putting any money into the firm unless this was matched with a significant investment by Gaz, the Russian owners of LDV.
But a spokesman for LDV said the appalling state of Gaz’s finances meant that – while it had done what it could for LDV – there was absolutely no prospects of investment from the Russian automotive giant.
Gaz results released at the end of last month show the firm has debts totalling nearly £1 billion. Fully half of this debt has to be paid back by the end of March, with 80 per cent of it repaid by the end of 2009.
On top of its money supply problems, Gaz has been hit by the unprecedented drop in the demand for vehicles, and in February it defaulted on a bond issue worth £100 million.
The LDV spokesman said: “Gaz has put what little they have in to keep it going but they can provide no more funds. If the government continues its position that means the company is going to die.
“Clearly the government had to do the right thing for the taxpayers. I think we accept that, and that’s the correct position to start from. But when you reach the position where we are, where the parent company is unable to do anything, it’s time for action.
“The critical thing for us is to go back to Gaz is not an option. We do need the government’s assistance and we just want to move the game on. I think it’s in the taxpayers’ interest.
“It’s a big decision, it’s a difficult decision, but ultimately we are looking for a very small amount of money in comparison with what’s being spent on the banks, to secure thousands of jobs and an industry with an exciting new product.”
LDV has been very positive about the business prospects of its new line of electric vehicles, saying if the company could be supported through its toughest time, there would be plenty of people willing to invest.
The spokesman welcomed the two investors who have promised the majority of the bridging loan, saying it was a positive sign that there were people willing to put their confidence and money behind the firm. He said: “We have got two parties who are looking to invest in the next few weeks. They are serious investors and that changes the position dramatically.
“The business is potentially very profitable, and it strengthens our case to the government.”
