Chrysler Corporation

HC Deb 05 February 1975 vol 885 cc516-7W

Mr. Adam Butler

asked the Secretary of State for Industry if he will specify the assurances given to the British Government by the Chrysler Corporation on its acquisition of Rootes Limited, which are of continuing effect; and if he will state which of them have been, and are at the present time being, observed.

Mr. Benn

The undertakings were as follows:

1. (i) Chrysler will not initiate any action to impair either the home or overseas operations or the management and direction of Rootes as a British company in its relations with the Government, labour, its British shareholders, and the public.
2. (ii) Chrysler undertakes to maintain a majority of British Directors on the Board of Rootes.
3. (iii) Chrysler confirms the plans of expansion covering development work at various factories and especially at Linwood in Scotland where the major development will take place and where it is planned to increase employment by several thousands; these plans are essential if Rootes is to remain competitive, achieve its proper share of exports and return to reasonable profitability.
4. (iv) Chrysler plans to achieve a progressive increase in the export of Rootes products without restriction to all practicable markets and to continue to make available its full international organisation for this purpose. They 517 note that, in the view of Her Majesty's Government, the test of the fulfilment of this undertaking would be that the export percentage of the products of the Rootes Group should be at least as high as the average for the British motor vehicle industry as a whole.
5. (v) Chrysler will nominate a Rootes Director (British) to each of the Boards of Simca SA and Chrysler International SA; and it is understood that a Simca Director (French) will be nominated to the Board of Rootes.
6. (vi) Chrysler confirms its intention to leave at least 15 per cent. of the entire equity capital (Ordinary, "A" Ordinary and Preferred Ordinary) in the hands of shareholders other than Chrysler, provided that in calculating this 15 per cent. Chrysler may take into account any shares held by the Industrial Reorganisation Corporation (IRC) or put by IRC to Chrysler (in accordance with undertaking (vii) below).
7. (vii) Provided that Chrysler acquires preferred ordinary shares in excess of its rights entitlement of £6,263,686 nominal, it will make available to IRC at par up to £1,512,228 nominal of such excess; i.e. up to 15 per cent. of the total Preferred Ordinary Shares, of £10,081,519 on condition that IRC participate to the same percentage in Chrysler's undertaking to subscribe up to £10,000,000 Unsecured Loan Stock. IRC will have the right on 1st January 1972 to put these securities to Chrysler at par plus any accrued but unpaid dividend or interest.
8. (viii) IRC will have the right to nominate one Director on Rootes Board as long as it owns all the securities mentioned in Undertaking (vii) above.

Undertakings (i) to (v) continue to have effect. The other three undertakings originally related to the participation of the IRC in Chrysler UK. The IRC's assets, rights and liabilities were transferred to the Government by virtue of the Industry Act 1971. The Government exercised the right expressed in undertaking (vii) realising the former IRC investment in January 1972. Undertakings (vii) and (viii) then ceased to have effect. Subsequently in December 1972 Chrysler was released from undertaking (vi).

I have written to the President of the Chrysler Corporation for an assessment of the present position.