HL Deb 24 July 1986 vol 479 cc383-4

"On 6th February I informed the House that it was the Government's intention, with the agreement of the Rover Group Board, that negotiations should be pursued for the separate privatisation of Unipart by the early placement of shares with United Kingdom institutions.

"With the approval of the Government the Rover Group have reached agreement in principle, subject to contract, for the sale of a 75 per cent shareholding in Unipart to a consortium comprising Unipart management and a group of UK investment institutions led by Charterhouse Bank. It is proposed to reserve up to 5 per cent. of the ordinary share capital for Unipart employees. Rover Group would receive up to £50 million, depending in part on Unipart's future performance. The Rover Group would subscribe up to £3.75 million for equity in the restructured company.

"Rover Group's links with Unipart will be retained through its holding in Unipart, and by contractual arrangements agreed between Austin Rover Group and Unipart. Return to the private sector should enable Unipart to develop and diversify its operations, while continuing to meet the requirements of Rover Group.

"On Leyland Bus my honourable friend the Minister of State for Industry informed the House on 27th June that the Rover Group had received tenders for Leyland Bus from Aveling Barford, the Laird Group, and a Leyland Bus management consortium. The Rover Group have recommended and the Government have agreed that the tender from the management consortium should be taken forward.

"The Rover Group have therefore reached agreement in principle, subject to contract, for the sale of Leyland Bus and a 33 per cent shareholding in Leyland Parts to a consortium of Leyland Bus management and investment institutions. It is also proposed that employees will be able to participate in the shares of the new Leyland Bus holding company. The Rover Group would receive about £11.7 million for Leyland Bus and the shareholding in Leyland Parts. The details of the sale contract remain to be negotiated.

"As I have consistently made clear to the House, there is substantial overcapacity in the traditional bus market and some measure of rationalisation would be inevitable under whatever ownership. It is the intention of the management team to decide urgently on the most effective new structure for their manufacturing operations and on employment levels. Some job losses will be involved, including the future closure of Easter Coach Works at Lowestoft. However, the Government accept the view of the Rover Group that the proposals by Leyland Bus management are soundly based and provide an opportunity to develop a viable bus manufacturing operation."