May 6, 2009 / 3:19 AM / 11 years ago

UPDATE 3-Malaysia's Weststar agrees to LDV deal - source

 * Malaysia’s Weststar agrees LDV deal - source
 * UK agrees to offer bridging loan of up to 5 mln pounds
 * Government hopes deal will avoid administration   (Adds comment from LDV spokesman in paragraph 9)
 By Keith Weir
 LONDON, May 6 (Reuters) - Malaysian vehicle importer Weststar has agreed to a deal to rescue British van maker LDV, an industry source said, and the British government said it would offer a bridging loan to help the plan go ahead.
 A government spokesman said he hoped the agreement would prevent LDV from going into administration, although that would be a matter for talks between LDV and the administrator, PricewaterhouseCoopers.
 LDV, owned by Russian carmaker GAZ (GAZA.RTS), said last week that it planned to file for administration on May 6.
 LDV employs 850 people in the English city of Birmingham and its collapse could threaten thousands of jobs in distribution and supplier networks.
 “A deal to put the company into the hands of Weststar has been agreed,” an industry source said, adding that there was a “short-term issue with injecting funds” in time to prevent the company from going into administration on Wednesday.
 Britain’s Department of Business, Enterprise & Regulatory Reform said later that the government was prepared to grant a bridging loan of up to 5 million pounds ($7.55 million) until Weststar had completed due diligence on LDV.
 “Weststar’s proposed purchase of LDV offers the only credible chance of keeping this manufacturing plant in the UK,” Business Minister Ian Pearson said in a statement.
 “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,” he said.
 Guy Jones, spokesman for LDV, later told Sky News television: “For us, it is positive news.”
 He said the company was confident it was well-placed to return to production.
 The van maker has been badly hit by recession in Britain and suspended production late last year.
 LDV announced a partnership with Weststar in 2007 under which Weststar assembles and markets LDV’s MAXUS vans in 20 countries in Asia and the Middle East.
 The British government has said repeatedly that any further funding for LDV should come from GAZ, Russia’s second largest car producer, which is controlled by entrepreneur Oleg Deripaska and has been hard hit by a slump in domestic sales.
 LDV last month asked the government for a bridging loan before a planned management buyout (MBO) which would have been led by GAZ chairman Erik Eberhardson.
 “I am very pleased that a deal has been put in place after the intensive discussions over the weekend,” Eberhardson said in a statement.
 “It is now vital to avoid administration so that Weststar and LDV have the best start for the future of the business.”
 The management buyout had planned to relaunch the company as a specialist in electric vehicles.  ($1=.6626 Pound)  (Editing by Greg Mahlich and Matthew Lewis)  

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