Jaguar aid talks with British government "near collapse"

Special Report: Global Financial Crisis

LONDON, May 6 (Xinhua) -- Jaguar Land Rover, a British automobile brand owned by India's Tata Group, will either have to cut its jobs and investment or turn to its parent company for help, as talks between the carmaker and the British government on financial support are nearing a collapse.

The carmaker received what it was told was a final offer from the business department on Friday, which it has not formally rejected, but is understood to feel that the tough conditions demanded in return for guaranteeing a loan are unacceptable, according to a BBC report late Wednesday.

If no financial help is provided, jobs and important investment could be cut, the report said.

The government is understood to want a right to veto management decisions, appoint its own chairman and have a say in any future redundancies at the company which employs 14,500 people.

Jaguar is said to have viewed the proposal as backdoor nationalization -- and is minded to turn the offer down.

The dispute centers on financial support from the European Investment Bank (EIB) and conditions the UK government is imposing in return for guaranteeing the loan.

At the heart of the dispute is the degree of control the UK government would be given in return for putting taxpayers money at risk by guaranteeing the EIB loan, the BBC said.

A spokesperson for the Department for Business, Enterprise and Regulatory Reform (BERR) insisted the government was "prepared to help, although not on any terms."

Indian Tata Motors, which bought Jaguar Land Rover for 1.2 billion pounds (1.8 billion U.S. dollars) just over a year ago, has refused to comment on the negotiations.

In January, Lord Mandelson, the Business Secretary, unveiled a 2.3-billion-pound package of measures designed to help the struggling car industry.

Jaguar Land Rover would have to invest heavily to re-engineer its fleet of predominantly large-engined vehicles to meet future environmental regulations, but the company's ability to invest has been hit by the savage downturn in the global car market.

Since September it has been reliant on Tata Motors, its parent company, for cash to stay in business.

The Indian company is itself controlled by Tata and Sons -- a group of businesses led by Ratan Tata.

A spokesman for Jaguar Land Rover said that discussions with the government were continuing.

"The government wants to see Jaguar Land Rover safely through difficult trading times and to provide stability for the company and its employees," the spokesperson from the business department said.