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Jaguar Talks Close to Collapse

May 8th, 2009
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Talks between Jaguar Land Rover, the largest UK-based carmaker, and the Government on a package of financial support are close to collapse.

JLR, which is owned by Indian conglomerate Tata, has been involved in discussions with the Government on guarantees on a £340 million loan from the European Investment Bank and a £400m financial aid package from state-backed banks Royal Bank of Scotland and Lloyds Banking Group.

The carmaker has received what it was told was a final offer from the Department of Business, Enterprise and Regulatory Reform. JLR has not formally rejected it, but is understood to feel that the tough conditions demanded in return for guaranteeing a loan are unacceptable.

If no financial help is provided, jobs and important investment in new environmentally-friendly technology could be cut.

Conditions laid down by the Government for underwriting the loans are understood to include: a right to veto management decisions, appoint its own chairman, have a seat on the JLR board and have a say in any future redundancies at the company, which employs 14,500 people.

In January, Lord Mandelson, the Business Secretary, unveiled a £2.3 billion package of measures designed to help the struggling car industry. The aid, he said, would be given through a series of loans and loan guarantees from both the Government and the EIB

A Department spokesman said insisted the Government was ‘prepared to help, although not on any terms’. He added: “Any government financial assistance must, of course, protect taxpayers’ money.”

A spokesman for JLR said that discussions with government were continuing.

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