LDV on the brink of a Malaysian rescue deal
Wednesday 06 May 2009
The struggling van maker LDV appeared to have had an 11th-hour reprieve last night as the Malaysian investor Weststar agreed to buy the business. The Government has offered a four-week bridging loan of £5m to facilitate the deal.
The van group, which employs 850 in its Birmingham factory, was due to go into administration today.
LDV has been looking for a buyer since admitting it was running out of cash in February. Gaz, the Russian automotive group owned by Oleg Deripaska which owns LDV, has refused to put any more money into the business and the plant has not built any vans since Christmas.
Lord Mandelson, the Secretary of State for Business – whose sojourn on Mr Deripaska's yacht while in his previous job as EU trade commissioner caused a political storm last September – turned down early requests for up to £30m to keep LDV going.
An attempted management buyout by the company's chairman, Erik Everhardson, foundered in March without the £5m needed to support it while pursuing negotiations with potential investors.
LDV has ambitious plans to reinvent itself as a bastion of green transport. The company has applied for an European Investment Bank loan, under the Department for Business's Automotive Assistance Package, to fund the development of electric vans. But without the viable future needed to secure the UK government guarantees, that loan will not go ahead.
Negotiations between Weststar, LDV and government officials were continuing last night to finalise the deal.
Ian Pearson, the Business minister, said: "Weststar's proposed purchase of LDV offers the only credible chance of keeping this manufacturing plant in the UK. Whilst completion of the deal is not certain, it would have been irresponsible of the Government not to support it going forward. But this is a one-off bridging loan and it cannot be extended."
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