UK Taxpayers to Underwrite £1bn Loan for Nissan, Securing Sunderland Plant's Future Amidst Uncertainty
United Kingdom Bankrolls £1 Billion Loan for Nissan's Restructuring Amid Global Job Cuts and Factory Closures
Amid uncertainty surrounding its Sunderland facility - the UK's largest car manufacturing plant - Japan's Nissan Motor Company has announced a major restructuring plan. This restructuring involves a £1 billion loan supported by the UK government.
The financial backing comes as Nissan plans to axe around 20,000 jobs globally and shut down seven factories, a move announced earlier this month. Despite speculation, Nissan has yet to confirm whether the Sunderland plant, which employs approximately 6,000 people, will be affected by the closures.
The British government's export credit agency, UK Export Finance (UKEF), will provide the loan guarantee. UKEF's role is to support the nation's exporters, especially in instances where private sector financing proves limited. This intervention comes after last year's debacle revolving around Harland and Wolff's vital export guarantee, which the UK government blocked.
Struggling with mounting losses in its previously lucrative Chinese market, Nissan is grappling with a turnaround. New CEO Ivan Espinosa was appointed in March to lead this transformation, following the collapse of merger talks with Honda. According to Bloomberg, the company is facing a steep loan repayment hurdle in the next fiscal year and is seeking around £5.2 billion through debt issuance, asset sales, and potential plant divestments in South Africa, Mexico, and France.
The Department for Business and Trade and Nissan have been reached for comment. UKEF declined to comment on specific transactions, citing speculation.
As part of its "Re:Nissan" restructuring plan, the firm aims to achieve positive operating profitability and free cash flow by fiscal year 2026, with total cost savings of 500 billion yen from fiscal year 2024 actuals. The plan also involves reducing its global production plants from 17 to 10 by fiscal year 2027, as well as shedding approximately 15% of its global workforce.
- The restructuring plan by Nissan Motor Company involves seeking financial support from the UK's export credit agency, UK Export Finance (UKEF), to guarantee a £1 billion loan.
- UKEF provides support to the UK's exporters, particularly in instances where private sector financing proves limited.
- As part of its restructuring, Nissan aims to reduce its global production plants from 17 to 10 by fiscal year 2027, shedding approximately 15% of its global workforce.
- Struggling with losses in its Chinese market, Nissan is seeking around £5.2 billion through debt issuance, asset sales, and potential plant divestments in South Africa, Mexico, and France.
