Accept government deal or lose European loans, says business secretary
19 July 2009

Jaguar Land Rover has been warned to accept the terms of a government loan guarantee or lose the money, according to reports.

The threat, reported in The Times newspaper, was made by Lord Mandelson, the business secretary, after months of wrangling between the two sides on the terms by which the government would agree to support a European Investment Bank guarantee.

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Earlier this month the government is understood to have offered JLR's owner, Tata, revised terms for the deal. It is understood that this offer removed the contentious requirement for the government to be represented on JLR's board.

However, under the new terms Tata would not be able to alter its business plan without the approval of ministers.

The Times reported that ministers were surprised that Tata had not yet provided a response to the latest proposal and said the government was becoming increasingly frustrated with the stance adopted by the Indian company.

The government's guarantee is needed for JLR to receive a 340 million Euros (£290 million) loan from the EIB. A separate short-term commercial loan of up to £200m is also understood to be being negotiated by the company before a longer-term financing structure is established.

A spokesman for Tata Motors only said that discussions were "ongoing".

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