UK Govt ready to guarantee loans for Tatas' JLR business
The British government has said that it is ready to guarantee loans to Tata group-owned Jaguar Land Rover, for which it is talking with European banks on the behalf of the cash-strapped carmaker. JLR, acquired by the Tatas in April last year for 1.15 billion pounds, has been facing financial troubles due to recession.Updated: May 17, 2009 22:43 IST
The British government has said that it is ready to guarantee loans to Indian conglomerate Tata group-owned Jaguar Land Rover, for which it is talking with European banks on the behalf of the cash-strapped carmaker.
While making it clear that the primary financial responsibility of JLR rests with the Tatas, the UK continues to hold "confidential discussions" over both short and long-term financing and business plans, an official at the British government's Department of Business, Enterprise and Regulatory Reform (BEFR) said.
JLR, acquired by the Tatas in April last year for 1.15 billion pounds from US auto giant Ford, has been facing financial troubles due to the global economic slowdown, and the company had sought assistance from the government.
Earlier in a media interview, Tata group chief Ratan Tata had said that he only wanted the UK government to facilitate access to credit and not a bailout for JLR. Besides, some other media reports have said recently that talks between the Tatas and the UK government have hit an impasse.
"The government wants to see JLR safely through difficult trading times and provide stability for the company and its employees. We regard JLR as a visible company with good long-term prospects," the BERR spokesperson said.
"That is why the government is having confidential discussions with JLR and its parent company over both short and long-term financing and business plans. These negotiations are continuing," BERR said.
The official further said that the government has actively encouraging Tatas "for the last six months to put together a long-term funding package.
"In parallel we have been talking to banks on their behalf, have appointed financial advisers to assist and we are prepared to guarantee loans from the European investment bank on the right terms," the official added.
However "any government financial assistance must, of course, protect taxpayers' money. But on this basis, we are prepared to help although not on any terms," BERR said.
JLR, which employs 15,000 people, is awaiting the government approval for the 340-million-pound loan from the European Investment Bank. The EIB has already given its approval several weeks ago, but cannot dispense the cash until Britain agrees to repay it if JLR goes bankrupt.
The Department of Business, Enterprise and Regulatory Reform further said "the government’s role is not about picking winners or ignoring market signals but removing barriers which hold business back.
"It is about identifying markets that offer significant opportunity for high value-added employment or growth in Britain and where the government can have a positive impact in unlocking the competitive potential of firms and workers in these markets."
Tata recently said the company does not seek bailout. "I would like to see the British government playing only one role. It controls the banks, and all I seek is the facilitation to provide access to credit on commercial terms. It's not a bailout," he had said in an interview published in the Sunday Times newspaper earlier this month.
First Published: May 17, 2009 20:36 IST