JLR negotiates advance of funding for £175m

Oct 8 2009 by John Cranage, Birmingham Post

The Government has, however, given the company a £27 million grant to help meet the cost of putting the new Land Rover LRX concept car into production at its Halewood plant on Merseyside and has advanced a further £10 million to help Tata Motors develop electric cars in the West Midlands.

Tata was subsequently able to announce that, thanks to new commercial deals, it no longer needed Government aid to finance its normal activities. But with JLR posting a first-quarter pre-tax loss of £62 million and with Tata itself falling into the red, cost-cutting measures are expected to result in the closure next year of either the Jaguar assembly plant at Castle Bromwich or Land Rover’s Lode Lane complex in Solihull.

Production would be consolidated at whichever factory remains open without compulsory job losses, although voluntary redundancies could not be ruled out.

Other measures include closing the final salary pension scheme to new members and cutting the pay of new staff by 20 per cent.

Offsetting that, up to 800 jobs will be created at Halewood, which will build the new “baby” Range Rover alongside the Land Rover Freelander.

Production of the Jaguar X Type saloon will halt at Halewood this year and the model will not be replaced.

The State Bank of India loan announced yesterday comes on top of facilities secured earlier from Standard Chartered Bank, Bank of Baroda and Burdale Financial, a subsidiary of the Bank of Ireland.

JLR has also won a $90 million (£56.6 million) export financing facility from ABC International Bank based in Bahrain.

The carmaker’s chief financial officer, Kenneth Gregor, said yesterday: “We are pleased our funding plans are progressing and appreciate the confidence shown by our banking partners in our business.”

The company is expected to announce the result of discussions on securing the EIB loan soon.