Coronavirus: JLR seeks a state loan to overcome the crisis | Economic news

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Britain’s largest automaker is in talks with Whitehall over a massive taxpayer support package as the coronavirus pandemic continues to wreak havoc on manufacturing industries.

Sky News has learned that Jaguar Land Rover (JLR) has submitted the largest custom loan application in the COVID-19[feminine crise aux ministres ces dernières semaines.

L’appel aurait porté sur un financement public temporaire de plus d’un milliard de livres sterling, bien qu’un porte-parole de JLR ait qualifié les suggestions selon lesquelles il s’élevait à 2 milliards de livres sterling d'”inexactes et spéculatifs”.

Ce week-end, la société a déclaré : ” Jaguar Land Rover [is] constantly in discussion with the government on a whole range of issues relating to COVID and we will not discuss confidential and private details. ”

A source close to JLR confirmed that a loan application had been filed with the Department of Business, Energy and Industrial Strategy (BEIS) and said it was under consideration by ministers.

Last weekend, The Sunday Times reported that the Indian automaker was among companies in which taxpayers may ultimately take a stake as part of an expansion of efforts to prevent the collapse of key sectors of the economy. economy.

JLR, a subsidiary of Tata Motors, is a giant in the UK industry, employing around 38,000 people.

Picture:
Jaguar Manufacturing Plant at Castle Bromwich

It operates three main production sites: at Castle Bromwich and Solihull in the Midlands, and Halewood in Merseyside.

About 20,000 of its employees have been put on leave under the government’s emergency wage subsidy program, according to a spokesperson, although about 2,000 employees at the Solihull site have returned to work this week.

Its cash position has been made much weaker by the pandemic, with the Standard & Poor rating agency recently estimating that the company is burning £ 1 billion every month.

In April, he said total retail sales for the fourth quarter, ending March 31, fell almost 31% to 110,000 vehicles due to the pandemic.

JLR added that he ended the year with cash and investments of £ 3.6bn, while also having unused bank facilities of £ 1.9bn.

It was not clear this weekend how those numbers had changed over the next seven weeks.

Last summer the company secured £ 500million in government guaranteed loans under a deal with UK Export Finance.

It came just weeks after news of an annual loss of £ 3.6 billion.

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Whitehall’s position on JLR’s latest loan application was unclear over the weekend, although ministers are unlikely to allow a company as vital to the UK’s manufacturing capacity as JLR to collapse.

The fact that JLR belongs to Aunty, the wealthy Indian conglomerate, can complicate matters, however.

Tata Steel’s UK operations have made a separate request for a £ 500million loan from taxpayers, while other companies looking for tailor-made assistance packages include McLaren, Petroineos and Virgin Atlantic Airways.

In each case, business sources say the government pressured them to deplete private funding resources before the money was made available to taxpayers.

Any state support could therefore require the JLR shareholder to inject new funding alongside them.

A BEIS spokesperson said: “The government is in regular contact with the automotive sector to help them navigate this crisis.

“We recognize the challenges the industry faces as a result of the coronavirus and companies can build on an unprecedented set of measures, including programs to raise capital, flexibilities with tax bills and support financial to employees. “

Given the pace at which it is depleting its cash reserves, this week’s expansion of the Treasury Coronavirus large-business disruption loan program is unlikely to do much help for JLR.

Under the revamped scheme, businesses can access state-guaranteed loans of up to £ 200million.

The Covid Corporate Financing Facility, a commercial paper program administered by the Bank of England, will likely be inaccessible to JLR due to its junk credit rating.

Ralf Speth, CEO of Jaguar Land Rover, delivers a speech during the first press day of the Geneva International Motor Show on March 6, 2018 in Geneva
Picture:
Ralf Speth, CEO of Jaguar Land Rover, resigns in September

JLR announced earlier this year that Ralf Speth, its longtime chief executive, would step down in September, although it is conceivable that he will stay in office longer to help deal with the crisis facing the automobile industry.

As part of its efforts to save money, JLR will prioritize manufacturing models such as Range Rovers and Land Rover Defenders in the coming months.

He told suppliers that spending on other programs, such as a new electric sedan and redesigning its XE and XF models, would be suspended.

Severe pain is already being felt in the supply chains of major automakers, with Arlington Industries – whose customers include JLR – calling on administrators earlier this month.

Other UK-based JLR providers have also said they have faced late payments and been warned of potential further reductions.

JLR is by no means the only major automaker to have been hit hard by the coronavirus epidemic.

Figures released earlier this month showed UK car sales fell in April to their lowest level since 1946.

Of the 4,321 new cars registered last month, most were fleet orders registered before the coronavirus crisis.

This week, Vauxhall’s parent company told Sky News business correspondent Paul Kelso that it wanted the government authorize the opening of motor shows from Monday to help revive the industry’s recovery.

A government spokesperson said: “The government is in regular contact with the auto industry to help them get through this crisis.

“We recognize the challenges the industry faces as a result of the coronavirus and companies can build on an unprecedented set of measures, including programs to raise capital, flexibilities with tax bills and support financial to employees. “

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