HC Deb 10 July 1941 vol 373 cc311-3
56. Sir J. Mellor

asked the Chancellor of the Exchequer whether dealings have commenced in United States stock markets in the preferred and common shares of the American Viscose Corporation; and, if so, how do current prices compare with the prices at which the shares were sold to the public by the syndicate in pursuance of the agreement with His Majesty's Government?

Sir K. Wood

I have no current figure, but I understand that a week ago the preference shares issued at $ 107.5 were being dealt in around 111, and the common stock issued at $ 24 around 24⅜. The stock market generally moved slightly upwards since 26th May, the date of issue of the shares to the public.

Sir J. Mellor

Will my right hon. Friend regard the market prices in America as some evidence in the assessment of the amount of compensation which will be payable to Messrs. Courtaulds?

Sir K. Wood

I cannot give any undertaking of that kind. Unless the matter is settled between the Government and the company, it will have to go to arbitration.

57 and 58. Mr. Stokes

asked the Chancellor of the Exchequer (1) why it was decided to pay so large an underwriting commission as $ 4,099,200 on the sale of the American Viscose Company;

(2)why a commission of $1,822,800 was paid to the purchasing syndicate engaged in the resale of the American Viscose Company, especially having regard to the fact that the sum received by His Majesty's Treasury was much below the market value?

Sir K. Wood

The Viscose shares had to be disposed of by issue to the public, since, owing to American legislation, direct purchase by interests already engaged in the rayon industry was precluded. Underwriting commission is a normal incident of the issue of shares to the public, and the scale of the commission was dictated by practice and the state of the market at the time of issue. The sum of $1,822,800, the payment of which fell on the Treasury only in the event of a resale, was a commission paid to the syndicate as remuneration for the services rendered in connection with the operation. The course of the market in the shares does not indicate that they were issued at too low a figure.

Mr. Stokes

Does the Chancellor of the Exchequer really think that 7½ percent, underwriting commission on transactions of this kind is warranted? Is he aware that the total expenses involved amount to a sum almost equivalent to 15 per cent, on the net sum received by the Treasury? Is he also aware that it is reported that the American Treasury have insisted on a refund of 1,000,000 dollars because they consider the whole thing unsatisfactory?

Sir K. Wood

I think my hon. Friend had better put a Question down on the latter part of the information he has given me. So far as the other part is concerned, I would refer him to my statement in answer to this Question that regard ought to be had to the practice in America and the state of the market.

Mr. Stokes

Does the Chancellor really think it is satisfactory that such a high underwriting commission should be paid?

Mr. De la Bère

Was it not thoroughly unsatisfactory?