Nov 24, 2008|
Bailout for loans and losses
Driving on loans
Around 9 months earlier, the Tata group had paid US$ 2.3 bn for acquiring luxury car maker Jaguar Land Rover (JLR) and had raised a bridge loan of US$ 3 bn to finance the deal. Since then the global financial turmoil has hit the auto industry forcing JLR to cut down on production so as to sell its piled up inventory of vehicles. In fact, the Tata's are bracing themselves for a likely financial stress over the next 2 years. They are reportedly seeking a £ 1 bn loan from the UK government.
While UK government's response will be known in about 2 week's time, JLR would be hopeful of a positive response on the back of similar instances elsewhere in Europe. One of the considerations for the UK government in keeping the carmaker afloat would be preventing further job losses in an already gloomy situation. JLR has a workforce of 15,000.
We wonder if the Tata group is just a victim of bad timing or has it bit more than it can chew and has over-stretched the balance sheets of its companies?
US$ 100 bn at stake in Citigroup
The US regulators are in negotiations with Citigroup to contain the bank's possible losses on US$ 100 bn worth of toxic assets - mortgages, bonds, auto loans and corporate loans. As per Bloomberg, the assets will remain at Citigroup. The US government will assume losses beyond a specified amount. It may be noted that Citi's stock plunged by 60% last week raising concerns over its health.
The US government's intervention in this case is line with what it has done in earlier instances such as JP Morgan's acquisition of Bear Stearns and Citigroup's failed attempt to acquire Wachovia. The company is asked to absorb the initial losses, while the government guarantees the losses beyond that.
Citigroup's failure would indeed be the last straw on the proverbial camel's back.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407