Currently reading: Tata gets loan reprieve
Imminent default on $1 billion avoided as banks agree new deal

Tata is expected to avoid defaulting on $1 billion (£660m) of debt, after banks indicated they would extend an upcoming loan payment until the end of 2010.

The news is crucial to Tata's future, as the $1 billion was due to be repaid next Friday. This dealwill complete the refinancing of a $3 billion (£1.9bn) bridge loan Tata Motors took out last year to finance its purchase of Jaguar-Land Rover.

Tata is estimated to have lost £800m-£900m covering operating losses since car sales slumped last year. It is also seeking UK government loan guarantees worth more than £800m to raise further capital, although progress has been slow.

Tata has alrady prepayed $1.11bn (£700m) of its bridge loan through equity fundraising and other measures.

This week, it raised an additional $885 million (£560m) from a domestic bond issue, a deal that has set the stage for the rollover of the $1.05bn remaining of the bridge loan.

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