LDV saved as Government approves £5m loan for Weststar takeover

May 6 2009 By Jonathan Walker

Thousands of jobs have been saved after the Treasury stepped in to provide a last-minute £5 million loan for Birmingham van-maker LDV.

The deal, announced only hours before a High Court was set to put the firm into administration, allows Malaysian firm Weststar to buy the
business.

Gordon Brown approved the loan in discussions with Liam Byrne (Lab Hodge Hill), the MP whose constituency includes the Washwood Heath plant.

Ministers have won assurances from Weststar that production will remain in Birmingham, following concern that work could shift overseas.

Weststar, which already has a joint operation with LDV to import Maxus van kits for assembly and sale in the Far East, will invest in “green” technology, focusing on production of electric vans.

The deal is expected to save up to 850 jobs at LDV and thousands more in the company’s supply chain.

However, Weststar still needs to complete the process of raising the cash it needs from investors. There is also no guarantee that no redundancies will take place.

LDV was due to go into administration today (Wednesday) after running out of cash.

Weststar completed negotiations with LDV’s current owners, Russian firm GAZ, over the weekend.

But it warned Ministers on Monday that it needed four weeks to conduct due diligence and raise £50 million from investors in Malaysia.

The loan will cover LDV’s running costs, of around £1.2 million a week, until the deal can be finalised.

Mr Byrne has been lobbying Ministers in the Treasury and Department for Business and Enterprise to back LDV, and met Mr Brown in Downing Street yesterday.

He said: “I am simply thrilled to bits that LDV now has a new future in its sights.

“I always said LDV could make it big in the green van market, which is why I fought