The UK, Birmingham-based struggling van maker LDV, owned by Russian billionaire Oleg Deripaska's GAZ Group, has been rescued from going into administration; the UK government has given it a 'one-off' £5-million bridge loan to enable it to be acquired by Malaysian vehicle importer Weststar Group.
LDV, which employs about 850 people and supports another 5,000 jobs in the West Midlands, had said last week that it planned to file for administration today, but a last minute deal hammered out by the UK government and Weststar, has saved it from certain bankruptcy.
Government officials were making hectic efforts over the night to save the van maker from collapse although the UK government had earlier refused to provide it with an additional £20 million-£30 million bridging loan beyond the out £24 million already doled out to LDV at the time GAZ acquired it in 2006.
But a deal was put through only after the UK government agreed to give a one-off' £5 million bridge loan till the time Weststar is able to come up with the necessary finance and complete due diligence on LDV.
Weststar had formed an alliance with LDV in 2007 to market, assemble, distribute and service the full range of LDV Maxus light commercial vehicles in the 20 countries in Asia and the Middle East.
Last month, The Times reported that the UK government had approached M&M, the market leader in multi-utility vehicles in India, and another company based in the Far East to find out 'whether they were interested in acquiring LDV. (See: M&M to bid for UK van maker LDV)
M&M denied any interest saying that neither was it approached nor it was negotiating with the UK government for acquiring LDV.
Ironically, the company's management led by GAZ chairman Erik Eberhardson, wanted to buy the company and had asked the UK government to provide a £5-million bridge loan till funding for LDV came in from the European Investment Bank. Eberhardson's proposal was turned down by the government.
Union leaders welcomed the breakthrough and Tony Woodley, Unite's joint general secretary, said the union was glad that the government did finally back the deal although it had been like pulling teeth in trying to get the government's backing.
Ian Pearson, the UK business minister, said that the Weststar's deal was the only realistic option of keeping the company going and although the deal was not complete, it would shown the government in poor light if it had not supported the deal.
The company was formed in 1987 through the merger of the Leyland Trucks division, including the Freight Rover van making interests, of the British Rover Group with the Dutch DAF Trucks company. In 1993 DAF NV became insolvent and Leyland DAF went into receivership, and was spun-off into four distinct companies through management buyouts, with LDV Limited being formed as a van manufacturer based in Birmingham in 1993.
It later changed its name to LDV Group and is a specialist manufacturer of the multi-award-winning range of Maxus light commercial vehicles with plans to bring out electric cars in the near future.
But, the van maker had stopped production in December due to a drastic slump in sales and had to pay about £1 million as part of its employee's insurance contribution.
In 2004, the UK government's lopsided policy of integrating its defense effort with the EU, a defense contract to re-equip the army with 8,000 new trucks, then worth £1.6 billion, went to a German-owned firm, Man-Nutzfarzheuge instead of LDV.
This was in spite of LDV's vehicles being battle-proven and meeting all the requirements of the defense ministry, to manufacture trucks at the LDV plant at Birmingham and create hundreds of new jobs.