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21. July 2009

TATA Motor warned to accept revised Jaguar Land Rover deal

It is reported that Lord Mandelson British Business secretary has warned TATA Motors, the owner of Jaguar Land Rover, to accept a revised proposal to guarantee hundreds of millions of pounds in short term funding or risk seeing it taken off the table. Following a fresh funding proposal that was made by the British Government earlier this month, Mr Mandelson warned TATA Motors recently.

The revised deal proposed by the Government is understood to have removed a contentious condition contained in the original offer to which TATA objected that would have given the taxpayer board representation at the JLR.

However, it includes a commitment that TATA would not be able to alter the car manufacturer’s business plan without the approval of ministers. It was unclear whether the new terms are acceptable to TATA.

People close to the situation said that ministers were surprised that TATA had not yet provided a response to the latest proposal and said the Government was becoming increasingly frustrated with the stance adopted by the Indian company.

Beside, at stake is a Government guarantee for GBP 290 million of European Investment Bank loans, while a separate short term commercial loan of up to GBP 200 million is also understood to be being negotiated by the company before a longer-term financing structure is established.

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