§ VISCOUNT ALEXANDER OF HILLSBOROUGH
asked Her Majesty's Government if they are now in a position to state the terms upon which they have agreed to lend money to Messrs. Colvilles, Ltd. for the construction of a strip mill in Scotland.
§ LORD MILLS
The following are the Heads of Agreement agreed between Her702WA Majesty's Government and Messrs. Colvilles, Ltd:
1. Her Majesty's Government undertake to provide a loan to Colvilles, Ltd., up to a maximum of £50 million for such developments at Ravenscraig and Gartcosh as may be approved by the Iron and Steel Board in connection with the manufacture of strip mill products.
2. The loan may be drawn in eight tranches over the four years from 1st October, 1959, provided that only one tranche may be drawn in any one of eight consecutive periods of six months each, the first beginning on 1st October, 1959.
3. After 1st October, 1962, the amount of the finance to be provided will be reconsidered with a view to reduction in the light of the cash needs of the Company judged by its actual and prospective financial position.
4. The total actual advances will not in any event exceed the actual expnditure incurred by the Company in relation to these developments as certified by the Company's auditors.
5. Interest on each tranche of the loan will accrue annually, from the date it is drawn, at a rate to be determined by the Treasury and such rate will apply throughout the currency of that tranche. In determining the rate of interest applicable to each tranche, the Treasury will have regard to the cost of borrowing by Her Majesty's Government at that date for a similar period.
6. The payment of interest (hereinafter referred to as "the postponed interest") on each tranche of the loan which accrues up to the date on which the works commence hot strip production (the construction period) will be postponed and will be subject to interest at the same rate as that tranche and payable at the same date and on the same terms as that tranche.
7. Interest from the date on which the works commence hot strip production (hereinafter referred to as "the current interest") will subject to the provisions of paragraph 8 below be payable annually on 30th September.
8. The interest payable in respect of the first three years from the date on which the works commence hot strip production may at the Company's option, exercisable in respect of each year, be treated as postponed interest and be subject to the provisions of paragraph 6 above.
9. Capital expenditure carried out at the Ravenscraig and Gartcosh works by any part of the Company's own organisation will be charged at cost.
10. The Company will undertake at any time during the currency of the loan if so requested by Her Majesty's Government to create a second debenture in favour of Her Majesty's Government over those assets of the Company to which the existing first debentures are applicable.
11. The Company will repay the loan with any unpaid interest to the date of payment not later than 1st October, 1978.703WA
12. The Company may at any time in advance of the due date for repayment repay at par any tranche of the loan or any part of any tranche provided that:—
- (i) one month's notice of such repayment is given;
- (ii) the interest on the tranche concerned has been paid up to the date of repayment and other interest due on the loan has been paid up to the previous 30th September;
- (iii) the tranches are repaid in the same order as they have been drawn.
13. The Company will forthwith increase its borrowing powers as may be necessary for the purposes of this agreement and will not during the currency of the loan further increase its borrowing powers without the consent of Her Majesty's Government.704WA
14. The Company will not, without consent of Her Majesty's Government, borrow during the currency of the loan any money ranking in priority thereto except to the extent that the existing £6 m. of 6 per cent. Convertible Debenture Stock has been converted or repaid.
15. The Company will not during the currency of the loan carry out any other major development (except those which have already been approved by the Iron and Steel Board) or effect any major investment without the consent of Her Majesty's Government.
The agreement is still subject to the shareholders and stockholders of Messrs. Colvilles, Ltd. approving the necessary increase in the company's borrowing powers.
House adjourned at sixteen minutes after eight o'clock.