London: After an year-long negotiations,
India`s Tata Motors edged closer to signing a financial aid
package with the British government for its struggling UK
subsidiary Jaguar Land Rover, a media report said on Sunday.
The agreement could now be reached as early as this week,
The Observer claimed.
Tata wants the government to underwrite a 170 million
pounds commercial loan to secure the short-term survival of
Jaguar Land Rover but baulked at the conditions the government
Executives from Tata and Jaguar Land Rover met officials
from Lord Peter Mandelson`s business department on Friday to
discuss the agreement. Tata`s advisors are still going through
each clause but no substantive areas of disagreement remain,
the report said.
The British government had originally demanded
representation on the board of Jaguar Land Rover and a veto on
redundancies in return for loan guarantees. These conditions
are now off the table, it said.
Tata Motors is now seeking government guarantees for a
much smaller loan than the 400 million pounds it sought
earlier because it is confident it can raise the capital
In May, it successfully completed the refinancing of the
USD 3 billion (1.8 billion pounds) bridging loan it had taken
out to buy Jaguar Land Rover from Ford in 2008. Moreover, the
drastic decline in vehicle sales in India has eased.
The consortium of banks that has offered loans to Tata
Motors now includes Indian banks. Ministers had envisaged that
Lloyds Banking Group, in which the government has a 65 percent stake, would take a lead role in providing the loans, but
other banks have offered to lend more.
Simultaneously, separate talks are on between the
government and JLR about providing guarantees to the 340
million pounds loan offered by the European Investment Bank.
This proposed loan is designed to help JLR adopt more
fuel-efficient technologies and is not tied to its short-term