Tata Motors Ltd.-owned Jaguar Land Rover is raising £2 billion ($2.7 billion) loan from global banks as the luxury carmaker seeks to ease the financial strain of a cyberattack that forced it to halt production, according to people familiar with the matter.
The foreign currency facility will be priced at about 110 basis points over the secured overnight funding rate, or SOFR, the people said asking not to be identified because the discussions are private. Citigroup Inc., Mitsubishi UFJ Financial Group and Standard Chartered Bank Plc have agreed to offer the 18-month credit facility to the carmaker, the people said, adding that the debt may be syndicated to more banks later.
The fund raise, that was reported by the Economic Times earlier on Monday, is expected to show JLR has liquidity to tide over revenue losses.
Read more: Jaguar Land Rover Cyberattack Shutdown to Hit 4 Weeks; Insurance Cover in Question
A JLR spokesperson declined to comment on the efforts to raise emergency funds. Representatives for Citigroup, MUFG and Standard Chartered also declined to comment.
Automotive suppliers typically operate on thin margins and need high working capital, leaving them vulnerable to prolonged disruptions after unexpected events such as the cyberattack confronting JLR. The funding requirement comes months after the luxury carmaker achieved its goal of becoming debt free on a net basis and will help the company normalize operations.
This stopgap financing is besides a £1.5 billion loan guarantee from the UK government that can help bolster its cash reserves and support its supply chain hit by the cyberattack-led shutdown.
JLR is grappling with the fallout from a hack that’s crippled operations at the UK’s largest carmaker and sparked chaos across the country’s auto supply chain. Plants in the UK, Slovakia, Brazil and India have been out of action since the start of the month, while some vendors are awaiting payments as JLR tries to clear a backlog of payments it owes to suppliers.
The company said last week that some of its systems were back online, enabling it to work through supplier invoices, accelerate parts distribution to dealers and speed up vehicle sales and registrations. It aims to restart some manufacturing operations on Oct. 1, although it warned it will take some time before it can return to full speed.
Top photograph: An entrance to the Jaguar Land Rover manufacturing plant in Castle Bromwich, UK. Photo credit: Chris Ratcliffe/Bloomberg
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