Drive to seal Jaguar bailout moves closer to finishing line

By Ray Massey for the Daily Mail
Updated: 15:34 EST, 15 July 2009

A deal to rescue ailing Jaguar Land Rover could be signed, sealed and delivered within a fortnight, Whitehall sources said last night. 

The basis of a deal is already 'on the table' and only requires Jaguar Land Rover's signature, according to government officials close to the negotiations.

The only impediment is 'how quickly Jaguar needs the cash', and how quickly they sign. 

The message came as Jaguar announced yesterday it is to axe production of its 'baby' XType saloon car with the loss of up to 300 jobs at its Halewood factory, with the prospect of more to come unless it receives help. 

The firm also made a thinlyveiled threat to the government that more severe measures could follow unless a wrangle with ministers over a £500million bailout of Jaguar and its sister car company Land Rover is quickly resolved.

The company has already been approved for a £340million European Investment Bank loan for future models - a third of which is earmarked to build a new luxury 'baby' Range Rover at Halewood, where the Land Rover Freelander is currently also built.

The UK government has also approved a £27million grant for the new mini off-roader.

But the deal hangs on Lord Mandelson's Department for Business approving a loan guarantee of up to £500million - and has led to intense posturing by both sides. 

Jaguar Land Rover bosses - and particularly their new Indian owners at Tata, which bought the UK car-maker for £1.4billion from Ford last June - say they have become frustrated at government delay.

But Whitehall sources say a new and 'heavily revised' loan guarantee deal is now 'on the table' and awaiting Jaguar's approval. A deal could be done within days or weeks, subject to Jaguar's approval, they say.

It is understood that earlier demands for a government-appointed seat on the board, which Jaguar and Tata said was unacceptable, was rejected.

The 'new deal' includes some 'strings' to safeguard taxpayers' interests, but is understood to stop short of a presence in the boardroom. 

Jaguar Land Rover chief executive David Smith, who has already axed 2,200 jobs, said: 'Further action will be determined by the state of the market and the speed with which the already approved £340million European Investment Bank loan can be drawn.'