HC Deb 09 July 1975 vol 895 cc155-6W
Mr. Park

asked the Secretary of State for Industry if he will make a statement about the long-term support for Alfred Herbert.

Mr. Varley

I have completed my examination of the report and recommendations submitted to me by the consultants appointed to investigate the position of Alfred Herbert Limited and the proposals I have received on behalf of the management and employees of the company.

I am proposing to make available to the company under Section 8 of the Industry Act 1972 long-term finance up to a maximum of £25 million on terms to be negotiated. Subject to the enactment of the Industry Bill, which recently received its Third Reading in the House, a major proportion of this finance would be in equity which would be vested in the proposed National Enterprise Board. These funds would enable the company to reduce its overdraft, and consequently its heavy burden of interest, and would provide working capital and capital for expenditure on new plant and equipment.

The provision of this money will be made in the context of a scheme of arrangement subject to the agreement of the shareholders which would provide for a reconstruction of the company's capital, including a reduction in the nominal value of the equity, and which will be put before the court under Section 206 of the Companies Act 1948. I am setting in hand preparations for the necessary negotiations with the parties concerned.

The Government will look to the company under its new acting chairman, Mr. J. W. Buckley, to take the necessary measures to strengthen further its management and to concentrate its resources in profitable directions. It will be for the company to determine the strategy and the consequent pattern of production to give effect to this purpose. The aim will be to ensure that Alfred Herbert Limited will achieve a profitable future in the coming years.

Until these proposals can take effect there will be a continuing need for the Government to guarantee the company's additional bank borrowing. The House tonight will be debating an order which would authorise me to guarantee up to £15 million of such borrowings.

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