TATA Motors has negotiated a £175 million private sector loan to help secure the jobs of workers at Jaguar Land Rover.
The loan means the company no longer needs financial support from the Government.
The Department of Business, Enterprise and Regulatory Reform (BERR) has been holding talks with India’s Tata and Jaguar Land Rover on guaranteeing both short and long-term financing.
The media quoted industry experts in May as saying the talks were stalled because the carmaker would not accept the tough conditions imposed by the Britain in return for guaranteeing a loan, including the right of the government to veto management decisions.
The talks centred on a rescue package that involved a £340 million approved loan from the European Investment Bank (EIB), to be used for the development of environmental technologies, and £450 million from British banks and underwritten by the government.
BERR said on Tuesday Tata had secured private sector funding for the company’s short-term financial needs.
``This additional funding will allow JLR to invest in future models and successfully launch the new XJ saloon on schedule and updated Land Rover models later this year.’’
Business Secretary Peter Mandelson said in a statement:``The government had offered bridging finance from the automotive assistance programme if necessary.
“We understand the Tata group will now be successful in resolving longer term financial needs but we are willing to help again if necessary.’’
Britain pledged in January to guarantee up to £2.3 billion of loans, including £1.3 billion from the EIB, to help its ailing car industry cope with a slump in demand.
More than 14,000 workers are employed at Jaguar Land Rover’s five British sites. Tata bought Jaguar and Land Rover from Ford in June last year for around £1.6 billion.
A statement from Tata in Mumbai said: “Tata Motors and Jaguar Land Rover have been in discussions with commercial banks for Jaguar Land Rover funding facilities, many of which have been successfully concluded in the last few months and the balance is expected to be completed in the coming weeks.
“Tata Motors and JLR also expect that the long term loan from the European Investment Bank of £340 million, sanctioned to JLR, can also be successfully secured in the coming weeks through appropriate commercial arrangements.”
The news was welcomed by Solihull's MP and the candidate who will contest Solihull for the Conservatives at the next General Election but both were critical of the role the Government played.
Lorely Burt, who is the Liberal Democrats' small business spokesperson, said it was a ‘vote of confidence’ in the future of the company.
"JLR has succeeded in securing funding despite the government, and not because of it," said Mrs Burt.
"JLR has managed to secure commercial funding because they are a strong, viable company withy a huge potential for future growth.
"Before the recession, Solihull based Land Rover was enjoying record sales worldwide, and can now look forward with some confidence to recovery."
Maggie Throup said: "This is really good news for everyone who works for JLR and for the people of Solihull. However I am disappointed that, despite the rhetoric, the Government never delivered on its promises."