§ 62. Mr. Stokesasked the Chancellor of the Exchequer whether any commissions were paid on the sale of American Viscose Corporation; what amount, and to whom?
§ Sir K. WoodAs I think it desirable that the House should be fully informed on the sale of the American Viscose Corporation, I am circulating, in the OFFICIAL REPORT, a full statement which will show in detail the various payments made in connection with the transaction.
§ Mr. StokesIs the Chancellor of the Exchequer aware that statements have been made, both in this country and in America, that a commission of $4,000,000 passed, and that the banking profits amounted to $7,800,000, and does his statement deal with both these points?
§ Sir K. WoodYes, Sir, my statement gives a complete statement of all the payments, and I should add, in order to allay apprehension, which I am sure the hon. Member would not share, that the only people who received commission were the syndicate and other persons in the United States who rendered various services in connection with the transaction.
§ Mr. StokesDoes the right hon. Gentleman consider that the services rendered were commensurate with the figure that I have stated?
§ Sir K. WoodI would refer the hon. Member to the figures, but as regards the transaction generally I take full responsibility.
§ Mr. A. EdwardsDoes the proposed statement of the Chancellor of the Exchequer make any reference to other transactions or only to this one?
§ Sir K. WoodOnly to this one.
§ Mr. EdwardsIs the right hon. Gentleman aware that sales have been made at reckless prices over there?
§ Following is the statement:
§ The Treasury purchased from Messrs. Courtaulds, Limited, 448,000 shares of the Common Stock of American Viscose Corporation. 24,405 shares were retained by Messrs. Courtaulds, Limited, and 19,150 shares were in other hands. The price payable by the Treasury to Messrs. Courtaulds, Limited, was to be determined by agreement, or in default of agreement, by arbitration. The 448,000 shares so purchased were resold to an American syndicate, consisting of 17 American financial houses, and a sum of $81,375 per share (a total of $36,456,000) was paid to His Majesty's Government on account of the purchase price. The capital of American Viscose Corporation was then rearranged, and, after allowance for the holdings retained by Messrs. Courtaulds, Limited, and others mentioned above, there were offered to the public:
§ 228,480 shares of Preferred Stock (par value $100 per share) at $107.50.
§ 1,568,000 shares of Common Stock (par value $14 per share) at $24.00.
An Agreement dated 15th March, 1941, made with the American Purchasing Syndicate provided as follows:—The purchase price to be paid by the Purchasers to the Government hereunder shall be computed as follows:
- (a) In the event the Securities to be Refold are resold by the Purchasers as provided in Article VI within six months after the date of this agreement, the aggregate purchase price shall be the Resale Price Received by the Purchasers, less (i) the total expenses incurred by the Purchasers in connection with the purchase from the Government of the Shares to be Purchased, any recapitalisation or reorganisation of the Corporation and the resale by the Purchasers of the Securities to be Resold; (ii) the amount of $1,822,800; (iii) 1 per cent. of the Resale Price Received by the Purchasers; and (iv) 10 per cent. of the amount by which the Resale Price Received by the Purchasers exceeds the sum of the amounts set forth in items (i), (ii) and (iii) above and $36,456,000; but in no event shall the aggregate purchase price be less than $36,456,000.
1496 - (b) In the event that the Securities to be Resold shall not be resold as provided in Article VI within six months after the date of this agreement, the aggregate purchase price shall be $36,456,000."
§ The payment of expenses, commissions, etc., depended upon the resale of the shares to the public; a full list of such payments is as follows:
- (i) Expenses (printing, legal expenses, engineers' report, etc.) $398,856. These include a sum of $44,379.82 reserved for contingent expenses not yet determined. It is a reserve for tax and if it is not payable, 95 per cent. will be paid to His Majesty's Government.
- (ii) Commission. $1,822,800. This sum, representing 5 per cent. of the down payment of $36,456,000 was payable in the event of resale and represented the Purchasing Syndicate's remuneration for financing and carrying through the transaction.
- (iii) Management fee— $581,959 (equivalent to 1 per cent. of the net resale price) representing the fee of the two firms who acted as managers of the Syndicate.
- (iv) Participation by the Syndicate in the proceeds of sale— $946,817. [The Agreement, as set out above, was varied in a material detail in that the item under Head (a) (iv) was reduced voluntarily by the Syndicate from 10 per cent. to 5 per cent. This participation represents an essential feature in the transaction, namely, that the shares, after acquisition by the Syndicate, should be resold to the public, the Treasury taking the greater part (eventually 95 per cent.) of the excess realised over and above expenses and the payment on account. Under this arrangement the Syndicate retained an interest in the success of the public flotation.]
- (v) Underwriting commissions were paid at the rate of$2.50 per share on the Preferred Shares and $2.25 per share on the Ordinary Shares. These amounted to $4,099,200 in all
§ No other payments of commission or of any other kind were made.
§ The total net amount received by the Treasury was $54,445,514, as follows:
1497| $ | |||||||||||
| Gross proceeds of issue | … | … | … | … | … | … | … | … | … | … | 62,295,146 |
| Less expenses of issue:— | … | $ | $ | ||||||||
| Item numbered (i) expenses | … | … | … | … | 398,856 | ||||||
| , (v) Underwriting commissions | … | …. | 4,099,200 | ||||||||
| 4,498,056 | |||||||||||
| Payments under Agreement, as set out above: | |||||||||||
| Item numbered (II) | … | … | … | … | … | … | 1,822,800 | ||||
| Item numbered(III) | … | … | … | … | … | 581,959 | |||||
| Item numbered(IV) | … | … | … | … | … | 946,817 | |||||
| 3,351,576 | |||||||||||
| 7,849,632 | |||||||||||
| $54,445,514 | |||||||||||
| This was paid in two sums, viz. $ 36,456,000 on 16th April and $117,989,514 on 17th June. |