Jaguar, Land Rover bring ratings downgrade for Tata Motors

June 4th, 2008 - 12:19 am ICT by IANS  

New Delhi, June 3 (IANS) Tata Motors was Tuesday downgraded by Moody’s Investors Service over the acquisition of iconic British brands Jaguar and Land Rover, as it is seen to pose risks involved in refinancing the loans for the takeover. “This rating action completes the rating review initiated in January 2008 when Tata Motors was named the preferred buyer for the Jaguar, Land Rover brands,” the rating agency said.

“The rating outlook is negative.”

According to Chris Park, a vice president and senior analyst for the agency, the new negative rating reflects the refinancing risk faced by Tata Motors for the bridge loans it will take for the acquisitions.

It also reflects the company’s weaker financial profile, the integration risks it faces and the uncertainty over the performance of the acquired brands under the new owners amidst slowing down of car sales in the US and Europe.

“The rating change reflects the considerable challenges that Tata Motors will face in successfully integrating such a large operation, which only recently turned profitable, and the immediate impact on its financial profile.”

He also said the future consolidated performance of Tata Motors will be predicated on whether the two brands can both sustain improved profitability, while contribut

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