US carmaker Ford has pumped a further £1.2bn into its UK subsidiary Jaguar to keep the luxury car maker afloat.
Jaguar hopes the 2006 launch of its XK model will boost its fortunes
The money will come from the sale of preferred shares to its US owner, Jaguar said.
This week Jaguar posted a pre-tax loss of £429.3m for 2004, blaming tough market conditions and a £173m write-down of investments.
Carmakers worldwide have been suffering amid slowing global growth, high raw material costs and fierce competition.
"The recapitalisation underlines Ford's commitment to Jaguar, despite recent rumours," Jaguar spokesman Don Hume told BBC News.
Recent press speculation has suggested that Ford is considering offloading the Jaguar business.
Mr Hume added that the £429.3m ($746.4m) loss for 2004 "underlined" why the company took the drastic action of closing its Browns Lane factory in Coventry.
However, the accounts were an improvement on 2003 when it revealed it was £601.1m in the red, mainly as a result of one-off charges £534m.
Much of the latest recapitalisation will go on paying off the 2003 and 2004 charges.
Reports added that part of the Ford cash will be used to reduce the £350m deficit in Jaguar's pension fund.
Meanwhile, the latest accounts do not include the cost of the recent shake-up of Jaguar's operations which are expected to come in at £75m for 2005.
Jaguar executives have hinted that the firm remains deeply in the red and losses are likely to continue amid "intensely difficult" market conditions.
The company, which has plants at Castle Bromwich in Birmingham, Whitley in Coventry, Halewood in Liverpool and Gaydon in Warwickshire, has already abandoned hopes of breaking even in the UK by 2007.
"Clearly we've made progress, but we will not break even by 2007," Mr Hume added.
Jaguar is still lumbering under the weight of falling sales, high raw material costs and soaring wage bills - its wage bill surged to more than £1bn in 2004 from £740m a year earlier, The Independent said.
The paper added that without Ford's cash, Jaguar would no longer be a going concern as by 31 December 2004 it had "negative shareholder funds of £748.8m".
Ford bought Jaguar for £1.6bn in 1989
On the other side of the Atlantic times are also tough for parent company Ford.
In October it reported a third quarter loss of $284m, and it is currently struggling in a tough US car market which is beset by high petrol prices and reduced consumer spending.
Next month it is expected to announce huge job cuts and factory closures in North America to tackle rising losses at its US business.
Ford has struggled to make money with Jaguar since it bought the group for £1.6bn in 1989.
The luxury carmaker is part of Ford's Premier Automotive Group (PAG) which includes Volvo, Land Rover and Aston Martin.