§ Mr. Stanley
asked the Secretary of State for Industry if he will detail the conditions attaching to the recent Government guaranteed loan of £50 million to British Leyland and the ranking of that loan.
§ Mr. Meacher:
This is not a guaranteed loan, but a guarantee to the corporation's bankers. As to ranking, it has been arranged that amounts outstanding under these guaranteed facilities will be subordinated, pending repayment, to all other claims of creditors of the corporation.
My right hon. Friend informed the House on 18th December of the broad intent of the conditions attaching to the guarantee, which have now been agreed with the corporation. These are as follows:The corporation agrees
- (a) to give full co-operation to the review team which the Government have appointed to advise on the corporation's situation, prospects and financial requirements;
- (b) not without the consent of the Secretary of State:—
- (i) to enter into a contract of service for a period longer than 12 months with any director or senior employee, or to vary substantially an existing contract of service with any director or senior employee;
- (ii) to undertake any substantial borrowings outside the existing banking facilities and those to be provided under the Government guarantee;
- (iii) to create any mortgage or charge on assets, other than a mortgage or charge
217 for the purpose of financing the acquisition, construction or development of land or buildings or plant, which are the only assets included in such charge;
- (iv) to approve any new capital expenditure project, or any acquisition of any company, if the total capital expenditure on such project or acquisition is likely to exceed £1,000,000;
- (v) to dispose of an interest in any subsidiary company or any material part of the business of the Corporation or of any subsidiary;
- (c) to inform the Secretary of State in advance of their intention to make any drawings under the additional borrowing facilities and the amount of such drawing and after notice of determination of the guarantee under paragraph 3 above not to make any drawing without the prior written consent of the Secretary of State;
- (d) to provide information to the Secretary of State about projects already approved by the Board where the total completed cost is likely to exceed £1,000,000;
- (e) in relation to each of its subsidiaries, to use all voting and other rights or powers of control exercisable by the Corporation in relation thereto with intent to procure (so far as it may lawfully and properly so do) that the subsidiary shall comply with the same restrictions as are set out in (b) and the provisions set out in (d) above;
- (f) not to recommend or declare or pay any dividend on the share capital of the Corporation, without prior consultation with the Secretary of State;
- (g) to furnish the Secretary of State with such information as he may reasonably require concerning the affairs of the Corporation and its subsidiaries;
- (h) that while responsibility for negotiating pay settlements will continue to rest with the Board the Corporation will seek to ensure that settlements are reached which are consistent with the financial situation now facing the Corporation and the national interest.