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Tata sells as loan crisis deepens
07 May 2009
Tata Sons, the overall holding company for Jaguar Land Rover owner Tata Motors, has sold shares in one of its other subsidiaries to raise money for the troubled car maker.
The parent company disposed of just over 10 million shares in Tata Consultancy Services, the largest software developer in India. The sale raised 6bn rupees (around £85m).
Tata Motors has been relying on the prospect nearly £800m of government-guaranteed loans to help it through the global recession, but the deal has been jeopardised by the stringent conditions imposed by the UK government.
"We would like it [the negotiations] to have gone more quickly," said Jaguar director Simon Warr. "Our conduit is through BERR and all the ministerial figures have been very supportive."
BERR, the department for Business, Enterprise and Regulatory Reform, has reportedly only agreed to underwrite half of the £350m loan from the European Investment Bank and insisted on a 15 per cent down-payment from JLR. Ministers also want to have the power to veto executive decisions, a board appointee and the ability to choose the company chairman.
“The primary financing responsibility rests with the parent company,” said a BERR spokesman. “We have been actively encouraging them for the last six months to put together a long-term funding package.”
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