LDV on brink of bankruptcy

The end appears to be drawing near for the West Midlands vanmaker, which employs 850 workers and has been in financial trouble since December. Negotiations finally broke down when potential buyer Weststar, a group owned by Russian oligarch Oleg Deripaska's company Gaz and linked to the Malaysian government, withdrew its offer.

It failed to gain funding from its investors and withdrew its guarantees against the £5m bridging loan that the UK government has been extending to keep the plant going, saying: "Weststar confirms that it has now completed the legal, financial and engineering due diligence on LDV. However, despite substantial efforts and a significant planned investment of its own funds, it has been unable to secure the remaining investment required to refinance the business."

The plant's 50 remaining workers were sent home yesterday, but up to 6,000 jobs may be threatened overall by its closure. Unions have called for the government to offer loan guarantees to support the bid but it has already refused this option and is unlikely to back the plan this time around.

Unite national officer, Dave Osborne, said: "After all the hard work which has gone in to trying to secure the LDV plant, it is extremely worrying that its future is once again at risk."

The problems at LDV will only serve to increase concerns over job losses at Vauxhall under new owner Magna International, as Weststar boss Deripaska is a partner to Magna in the purchase. In particular the van plant at Luton is thought to be at risk.

WHAT THEY ARE SAYING
Paul Newton, analyst at researcher IHS Global Insight, in the Guardian: "It's a shame. It would be very tough for the government to justify putting any more money into it. They have already put in £25m and aren't going to see that again."

David Wighton, the Times: "The Government initially gave Weststar, the would-be buyer, a bridging loan of £5m. But putting up any more money would be too risky, given the huge challenges that LDV faces. The unsettling aspect of the affair is that Gaz, the Russian company that appears to be walking away from LDV, is also involved in the consortium negotiating to buy GM Europe, whose Vauxhall unit competes with LDV. But then there are few dream buyers for vehicle businesses, as GM found with Hummer."