HC Deb 22 July 1941 vol 373 cc790-3
50. Mr. Stokes

asked the Chancellor of the Exchequer whether His Majesty's Government or the shareholders of Courtaulds, Limited, will be expected to bear the sum of approximately 8,000,000 dollars paid in commission and expenses on the sale of the American Viscose Company?

Sir K. Wood

The expenses form a deduction from the amount receivable by the Treasury in respect of the issue to the public. The amount payable to Messrs. Courtaulds, Limited, is to be settled by agreement, or failing agreement, by arbitration.

Mr. Stokes

Does that answer mean that the Government will bear the cost of this transaction, and were Messrs. Courtaulds consulted before the rate was decided upon?

Sir K. Wood

Messrs. Courtaulds will, as I have stated, receive the amount payable to them either by agreement with us or, if agreement is not reached, by arbitration.

Mr. Stokes

Were they consulted?

The following Question stood upon the Order Paper in the name of Mr. STOKES:

"51. To ask the Chancellor of the Exchequer how the underwriting commission of 7½ per cent., arranged by the Treasury on the sale of the American Viscose Company, compares with underwriting commission normally paid in the country? "

Mr. Stokes

There is a mistake in this Question. The last three words should read "in this country."

Sir K. Wood

I am answering the Question as it appears on the Order Paper. The underwriting and selling commission on the sale of American Viscose shares, which was $ 4,099,200, is 6.58 per cent. of the gross selling price. I am advised that it is customary in New York to relate underwriting and selling commission to the sale price and that the commission in this case does not compare unfavourably with commissions normally paid in the country.

Mr. Stokes

Can the Chancellor state how that rate compares with the rates normally paid on such a transaction in this country?

Sir K. Wood

I cannot say, but I should think it is higher than those.

52. Mr. Stokes

asked the Chancellor of the Exchequer whether he has any statement to make on the decision of the American authorities to insist on a refund to the British Treasury of 1,000,000 dollars on account of excessive commission and expenses in connection with the sale of the American Viscose Company?

Sir K. Wood

I have no information about any such decision. No refund was made, but, as already stated, the participation of the Syndicate in the net proceeds of the issue, was voluntarily reduced by them from a 10 per cent. to a 5 per cent. basis, resulting in an increase of $946,817 in the amount received by the Treasury.

Mr. Stokes

Is it not clear from the reports that the American company themselves were dissatisfied with this transaction, and is it not a pity that Sir Edward Peacock did not seek their aid in a transaction in which he has obviously been coerced by the Americans?

Sir K. Wood

No, Sir, I cannot accept that.

55. Sir Frank Sanderson

asked the Chancellor of the Exchequer whether, in view of the public interest and apprehension which exists in regard to the American Viscose deal in this country, and, in particular, among the 80,000 ordinary shareholders in Courtaulds, Limited, he will consider laying on the Table of the House the United States regulations, filed under the United States law, with the Securities Exchange Com mission.

Sir K. Wood

No, Sir. I do not think that any useful purpose would be served thereby.

Sir F. Sanderson

Is my right hon. Friend not aware that these regulations are equivalent to a British company's prospectus, and in view of the fact that this document is available to the U.S.A., namely, Morgan Stanley and Co. and Associated Bankers, can he give any reason why it should not be laid on the Table, and does he not consider that it is only equitable and reasonable that it should be?

Sir K. Wood

No, I do not think so, for the reason I mentioned just now.

56. Sir F. Sanderson

asked the Chancellor of the Exchequer whether the offer of American Viscose shares held by Courtaulds, Limited, made on 20th May, included the liquid assets, namely, cash in hand and lying on deposit in the banks, 10,000,000 dollars, market securities valued at 26,000,000 dollars, and stocks valued 13,000,000 dollars?

Sir K. Wood

The purchase and resale were not of the assets of the corporation, which remain in the possession of the corporation, but of the greater part of the shares. In the case of any company the value of the shares is determined by an amalgam of considerations, including the value of the company's assets, both liquid and otherwise.

Sir F. Sanderson

Am I to understand that for all practical purposes the substantial commission has been paid on what is the equivalent of dollars lying in the banks in the U.S.A. in the form of actual dollars and the equivalent, namely, market securities, which in effect means they were simply transferred from one account to another, and does my right hon. Friend consider that it is either equitable or just that commission should have been paid upon those liquid assets?

Sir K. Wood

I do not regard that as a fair statement.

Mr. Stokes

May I ask the Chancellor whether he means that? [Interruption.] On a point of Order. I wish to give notice that in view of the unsatisfactory nature of these replies, I shall raise the matter of the American Viscose Corporation on the Adjournment at the earliest convenient opportunity.