Jaguar deal stalls on tough loan conditions

Published on Thursday 7 May 2009 01:25

THE future of troubled British carmaker Jaguar Land Rover was the subject of speculation last night after industry sources said its parent company had rejected a government loan guarantee need to keep it in business.

India's Tata Motors is believed to have rejected the 450 million loan, part of a 800m refinancing package, because of tough conditions imposed by the UK government in return for guaranteeing the loan, including 15 per cent commission, the right to veto management decisions and a say on future redundancies.

Meanwhile workers at van maker LDV were warned yesterday that there was no guarantee all their jobs would be saved under a proposed rescue plan. A court hearing expected to place the Birmingham firm into administration was adjourned for a week after a judge was told Russian owner Gaz had agreed in principle to sell its LDV shareholding to Malaysian giant Weststar.

Takeover talks will intensify over the coming days after a government decision to offer a loan of up to 5m in the next month to help save the factory, which employs 850 workers.

LDV spokesman Guy Jones said: "This deal will secure production here in Birmingham at this site, securing as many jobs as possible, but clearly the marketplace and the economy are going to determine exactly how many people are required to build vehicles and assemble them."

LDV said: "We appreciate that this is a difficult time for the government, but this support allows time for negotiations to be concluded to secure thousands of British jobs when the alternative would almost certainly have been the loss of them all."