Jaguar Land Rover is reportedly in talks with the government to secure a loan due to the financial impact of Covid-19.
The carmaker submitted the largest bespoke loan request of the coronavirus crisis to ministers in recent weeks, according to Sky News.
Jaguar Land Rover has seen sales plunge by more than 30 per cent in the most recent quarter. In March the automotive firm suspended all production at its UK production plants in an effort to minimise the spread of Covid-19.
The request was reportedly for temporary state funding of over £1bn but a spokesperson described suggestions it was as high as £1bn as “inaccurate and speculative,” according to Sky News.
The Sunday Times had previously reported that the firm, owned by India’s Tata Motors, was among the companies taxpayers could take an equity stake in.
The government’s Project Birch plan could see the Treasury act to save the firms whose failure would “disproportionately harm the economy”. The chancellor will repotedly bailout viable companies “which have exhausted all options,” including the government’s existing support schemes, according to the Financial Times.
Approximately 20,000 of Jaguar Land Rover’s employees have been furloughed, which sees the government pays 80 per cent of their wages. Around 2000 employees at the firm’s Solihull site returned to work last week.
However, the firm does not qualify for the joint Treasury-Bank of England (boE) Covid Corporate Financing Facility which is aimed at large businesses, and requires firms be “investment grade rated”.
Credit rating agency Standard & Poor’s recently estimated Jaguar will burn through £1bn in cash each month after the shutdown of its facilities and if “severely reduced production” continues over the next year.