Van-maker LDV admitted today that Malaysian group Weststar has withdrawn its bid, leaving it with no option but to file for administration – the fate for which it seemed destined before Weststar’s eleventh-hour rescue package emerged in May. The Government won’t be happy – it stumped up a £5m bridging loan to make the deal happen, and apparently some of this money has already disappeared. Nor will the firm’s staff and suppliers. But since LDV hasn’t made a profit for donkey’s years, it’s arguably not a massive surprise that Weststar – or perhaps its bankers – have got cold feet about the deal.
In a statement this morning, the LDV board said it had been ‘forced to reapply for administration to protect the assets of the business... due to the fact that essential funds required to maintain the business and workforce as a going concern are not being made available.’ In other words, the cash has dried up again. Business Minister Ian Pearson (who’s handling the case due to Lord Mandelson being a mate of GAZ boss Oleg Derispaska) said the Treasury had given LDV ‘a bridge to the future, but... unfortunately Weststar was unable to cross that bridge’.
The collapse of the deal will be all the more galling for LDV’s 850-strong workforce because it seemed like Weststar had brought the firm back from the brink. The Malaysian outfit had agreed a price with GAZ (the Russian group that used to own LDV), and with the Government supplying a loan to tide them over, it looked like a done deal. However, it may be that Weststar didn’t like what it found when it came round to kick the tyres in the due diligence phase. Or it may be that when the group asked its bankers for the necessary funds, they blanched at the idea of shelling out anything for a loss-making Birmingham-based maker of niche superannuated vans.
Either way it looks set to leave staff and suppliers high and dry. If the deal really is dead, it’s hard to imagine another buyer emerging at this stage, given LDV’s much-publicised problems (it’s basically been out of action since Christmas). The trade unions will no doubt demand that the Government step in and save the firm, but it’s hard to see that happening, for all sorts of reasons.
The news will rightly be seen as a reminder of just how bad things are for the UK car industry, and how far away the recovery probably is. But we have had at least one positive this week: yesterday Honda finally re-started production at its Swindon plant, after a four-month break (albeit at half capacity). So it's not all bad news...
In today's bulletin:
LDV driven to administration after Weststar U-turn
Ryanair in the red - but clearer skies ahead
Kingfisher soars as B&Q enjoys the sunshine
Micro-businesses fall through the training gap
Seven ways to... nurture survivors