§ Mr. KILEYasked the Minister of Munitions whether he has agreed to cancel debenture and other charges amounting to £1,950,000 which the Department hold on the assets and uncalled capital of the British Cellulose Manufacturing Company, Limited, accepting in lieu profit-sharing preference shares to the value of £1,450,000; can he state whether the Government have nominated two directors of this company; whether these two directors are to devote all their time to the duties of the company; whether they are to receive a salary from the Government; if so, to what amount; and can he state the value of cash on shares to be received by the vendors or promoters?
Mr. HOPEIt is not correct to suggest that the debentures and other charges on the assets of the British Cellulose and Chemical Manufacturing Co., Ltd., amounting to £1,950,000 are held by the Ministry of Munitions solely in its own right. Of this £1,950,000 the Ministry holds the sum of £700,000 as trustee for other parties; but, in addition, the Ministry holds a further charge of £200,000. The Ministry holds therefore, on its own behalf, the sum of £1,450,000, and in lieu of this the Government has agreed to accept 1,450,000 7½ per cent. Cumulative Participating Preference shares of £1 each. At the same time the Government reserves the right to veto the creation of any debentures or other charges which might rank in priority to orpari passu with their shares. The Government has appointed two directors to sit on the Board of this company; but those directors will not devote the whole of their 68W time to the duties of the company. The ordinary remuneration received by these directors from the company will be paid into the Exchequer, and they will receive remuneration from the Government in the same way as other directors appointed by Government Departments. The amount of such remuneration is now under consideration. The issue of Preference shares to the public is for the purposes of enabling the company to discharge its liabilities and to provide the cost of new plant and the necessary working capital. The whole of the amount received for these shares less the usual expenses of issue will, therefore, be received by the company for these purposes.
§ Mr. KILEYasked the Parliamentary Secretary to the Ministry of Munitions whether by the appointment of the directors to the British Cellulose Manufacturing Company, Limited, the Government are taking any responsibility to the investors who may invest their capital on the knowledge that Government representatives are on the Board; whether he is aware that this company proposes to manufacture artificial silk and other commodities in competition with other old-established firms; are the Government prepared to advance capital and appoint directors to the boards of other such competitive firms; and, if not, why not?
Mr. HOPEThe answer to the first part of the question is in the negative and to the second part of the question the answer is in the affirmative, but the Government is only concerned with policy of the Company in so far it affects their own security. As to the remainder of the question the Government advanced money to the British Cellulose and Chemical Manufacturing Company, Limited, during the War, solely for the purpose of ensuring an adequate supply of certain materials which were vitally necessary for War purposes. This money was secured by debentures and other charges. The Government has now consented to take 7½ per cent. cumulative participating preference shares in the Company in lieu of their debentures and other charges, and has appointed two directors to sit on the board as a matter of ordinary business prudence. The object of this arrangement is to ensure that the advances previously made by the Government are secured in the manner thought to be most desirable
69WIt is not the practice of the Government to advance capital to trading companies for the purpose only of enabling such companies to develop their ordinary business, and the Government therefore are not prepared to make such advances either to this or similar companies.