JLR negotiates advance of funding for £175m

Oct 8 2009 by John Cranage, Birmingham Post

Jaguar Land Rover secured a further multi-million pound tranche of funding yesterday with the help of its Indian owner, Tata Motors.

The luxury carmaker announced it had negotiated an advance of £175 million from the State Bank of India.

It brings the inflow of fresh working capital into JLR since global credit markets began to unfreeze to about £500 million.

The announcement coincided with the official closure of the online petition launched by the Birmingham Post six months ago to press the Government to provide JLR with targeted aid to help it survive the recession which cut sales of Jaguar and Land Rover cars by more than half and sent the business into the red.

More than 8,000 people signed the petition on the 10 Downing Street website, which ended yesterday after six months.

JLR, which employs about 15,000 in the West Midlands and on Merseyside and spends more than £2 billion in the UK every year, asked the Government for a commercial loan, or loan guarantee, after normal sources of credit dried up during the global banking crisis.

Business minister Lord Mandelson responded by saying responsibility for financing JLR’s activities rested with Tata, which bought the business from Ford in June 2007, even though it had pumped some £1 billion of new capital.

Months of negotiations ensued. These ultimately broke down amid claims that the Government wanted to appoint a representative to the JLR board and to have a say in the company’s business plan. Talks about a Government guarantee for a separate loan of £340 million offered by the European Investment Bank to finance a new generation of greener, more fuel-efficient, cars also broke down.