§ 3.48 p.m.
§ Lord BESWICKMy Lords, with permission, I will now repeat a Statement being made by my right honourable friend the Secretary of State for Industry, in the other place:
"In August 1974, Ferranti Limited sought the Government's help to overcome the company's financial difficulties. As the House knows, the Government gave a guarantee under Section 7 of the Industry Act 1972 to the company's principal banker of additional overdraft facilities. Adequate finance was thus made available for the continuance of the company's business whilst solutions to its difficulties were considered.
"Ferranti Limited is an important company. It has developed valuable technological capabiliites in a number of areas; it is an important supplier of defence equipment; it has gained valuable exports; and it provides employment, mostly in assisted areas including Scotland. Furthermore, with changes in financial and management structure, there are good prospects for the viability of the company. With the objectives of establishing a viable company, thus preserving employment, and maintaining a British capability in those areas where Ferranti Limited has a high reputation, the Government have agreed to provide financial support. After constructive tripartite discussions with representatives of the workforce and following negotiations by Sir Don Ryder with the major shareholders of Ferranti Limited, arrangements for the Government's financial support have been settled.
"Details of the arrangements will be included in the Official Report but their broad effect is that the Government will subscribe a total of £15 million of new capital, partly in voting equity, partly non-voting, and partly in loan form at a commercial rate of interest. The Government will have 62½, per cent. of the total equity, and 50 per cent. of the votes, which is more than enough to give the Government effective control over the company.
736 "There are provisions in certain circumstances for part of the Government's non-voting shares to be made available if the company is able to arrange a public marketing of its shares. At that time, or at the latest on 1st October 1978, all the non-voting shares will acquire voting rights; the Government's voting power could not in any circumstances fall below 50 per cent. and might well increase.
"Some changes will be made in the management of the company. A new Chief Executive will be appointed, as will a Finance Director, both to be approved by the Government, which will also have the right to appoint some other directors.
"The Government believe that these arrangements represent the soundest basis for an agreement between the Government and the shareholders to give Ferranti a viable future and to safeguard the interests of the workforce. The new management would be required to prepare plans for the future of the company, including an assessment of the prospects for the Transformer Division which has been making heavy losses; but no decision to separate the Transformer Division from the company will be made without Government approval.
"I should add that, in accordance with our approach to industrial policy, we shall be arranging for a planning agreement with Ferranti and that the Government will encourage the development of industrial democracy within the firm on an agreed basis.
"These arrangements should provide the opportunity for the company to recover from its present difficulties and make a full contribution to the national economy."
§ Following are the details referred to.