Tata owned Jaguar rescue bid in doubt due to warring Brit departmentsApril 30th, 2009 - 2:36 pm ICT by ANI
London, Apr 30 (ANI): The wrangling between the Treasury Department and the Lord Mandelson-led Business Department might delay an 800 million pound emergency package for the Tata owned Jaguar Land Rover.
Jaguar Land Rover executives fear that even if they can agree terms with the Treasury for the refinancing it may be months before they receive the cash. Such a delay could force the carmaker to cut jobs in its 15,000-strong workforce to stay afloat.
Officials from the Business Department (BERR) met executives representing Jaguar Land Rover this week to discuss the package, The Guardian reported.
The carmaker was warned that the conditions demanded by the Treasury in return for supporting the 800 million pound package may be so exacting that owner’s Tata would not agree to them.
A spokesman for Mandelson’s department last night denied there was a rift with the Treasury, but indicated that Tata was responsible for securing financing for Jaguar Land Rover.
The government announced this month that the European Investment Bank had agreed to lend 340 million pounds to Jaguar, but executives are frustrated that the government has yet to commit to underwrite the loan, The Guardian reported.
The 340 million pounds is part of the 800 million pound refinancing package for Jaguar, made up of loans from banks led by government-controlled Royal Bank of Scotland and Lloyds Banking Group.
Tata is thought to have agreed to provide 100 million pound. The Treasury has already agreed in principle to guarantee only about three-quarters of the EIB loan. Jaguar has agreed to underwrite the rest. But after three weeks of talks with civil servants, the Treasury has still not indicated what conditions it will set for underwriting the loan.
Jaguar is concerned that the Treasury may demand that the government is given an equity stake in the firm or that Tata pump another 300 million pound into its UK subsidiary. (ANI)
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