10:15 am, January 11, 2009
TALKS will resume this week between Tata and the UK government, over state aid for Jaguar Land Rover.
The Indian car maker has recruited American bank CitiGroup to advise it, report The Sunday Times.
Tata is seeking a short-term bridging loan from the government. This will help it with cashflow problems caused by a collapse in new car sales.
Insiders at the company say the government is ‘close’ to approving a £500 million bridging loan. However, government insiders disagree, saying the company does not urgently need cash.
Experts say a solution will not be found quickly – despite Tata’s recruitment of Citigroup.
However, the chief of Tata says the government should provide support, like other European governments have done.
The German government has pledged a loan of £1.6 billion to Opel (Vauxhall in the UK), and is considering a similar loan to Ford. The Swedish government is considering aid to Saab and Volvo, too.
In separate news, business secretary Lord Mandleson could commit to an extension of the pre-budget report’s special liquidity scheme this week. He will address a motor industry summit in Brussels on Friday, where an announcement is expected.
It will give car makers access to finance, helping them fund loans for new car buyers.
A further announcement could come on Wednesday. The Sunday Times reports that Mandleson will give evidence to the Commons business committee, on the state of the car industry.
Mandleson: no bail out is needed
