STRUGGLING Jaguar Land Rover is to receive new funding of £340 million - but with strings attached as to how it spends the money.
The loan, from the European Investment Bank EIB), will be tied to the carmaker’s plans to develop a new generation of “green” vehicles in order to cut emissions.
JLR met the EIB’s criteria for the funding which was approved by the bank’s directors meeting in Luxembourg yesterday (Tuesday). The loan has to be underwritten by the UK Government.
The company has been badly hit by the global credit squeeze and the slump in car sales, and says it still needs hundreds of millions of pounds to finance its day-to-day operations.
JLR spokeswoman Claire Tallis said: “We are pleased the EIB has confirmed that Jaguar Land Rover is eligible for £340 million in loan support as part of its Clean Transport Facility.
“This loan will support JLR’s significant investments in environmental technologies that are crucial for the future - part of a total commitment to the business of over £800 million.
“Access to the funding is subject to a number of due diligence and commercial loan criteria including partial backing by the UK Government’s guarantee scheme that we will be working to complete as soon as possible.”
JLR, which employs about 15,000 people in the West Midlands and on Merseyside, has shed hundreds of jobs and cut back production in its fight to survive the recession.
Solihull MP Lorely Burt, whose constituency covers Land Rover’s Lode Lane plant, welcomed the EIB funding, but stressed the company still needed more financial help.
“This is a welcome step in the right direction but the whole process is being conducted far, far too slowly,” she said.
“Land Rover and its staff are working in partnership to retain the maximum skills and jobs it needs to weather the recession and come out fighting at the other end. Government needs to recognise this and get a move on to guarantee this funding and confirm the other financing arrangements.”
Mrs Burt added that she would be “knocking on the door” of Business Secretary Lord Mandelson to make sure the deal got the Government’s seal of approval.
Industry expert, Prof David Bailey, of Birmingham Business School, said last night: “The EIB loan is a vote of confidence in Jaguar Land Rover and means it can continue to develop new green technologies.
“But it won’t help its short-term cash flow problems, and the Government must give it the loans or loan guarantees it needs.”