§ Mr. Michael McNair-Wilsonasked the Secretary of State for Northern Ireland (1) how much public money has been invested in the Lear Fan project; how the finance has been provided; what interest is being earned on what investment; and what equity holding the Government possesses in the company;
(2) what considerations motivated his decision to write-off £20 million owed to Her Majesty's Government by Lear Fan; and if he will make a statement.
§ Mr. Adam Butler[pursuant to his reply, 6 December 1982, c. 376]: In view of the high degree of public interest in this case, and with the agreement of the company, I propose to give fuller details than is normal of the main elements of the refinancing arrangements for Lear Fan Ltd. into which Her Majesty's Government entered, under a new agreement dated 14 September 1982.
Under the original financial agreement, entered into by Her Majesty's government in March 1980, the company received £7.02 million in grants and £9.23 million by way of loan. Between March 1980 and September 1982 additional assistance was provided, first by a $15 million 533W bank guarantee and subsequently further loans of £9.07 million by way of interim financing, which enabled the company to continue trading in the six-month period up to September 1982, while new private sector funding was being sought.
The new agreement concluded on 14 September 1982 has various elements. It provides that no recovery of the original grants will be sought, while the original loan is in effect converted into a per capita employment grant, secured against achievement of the original Northern Ireland employment target of 1,250, additional Government assistance is linked to increases in employment above 1,250. Her Majesty's Government hold a 5 per cent. equity stake in Fan Holdings Inc., the newly formed 100 per cent. owner of Lear Fan Ltd. Further, under the new agreement repayment of the interim loans has been waived and Her Majesty's Government stand to receive royalty payments of up to $33.75 million on sales of aircraft.
Finally, Her Majesty's Government have agreed to extend the bank guarantee to 31 December 1986 and to provide further public funds up to a maximum of $30 million in a predetermined ratio with private sector money which will ensure that by far the greater part of the new funding is met from the private sector. Her Majesty's Government's share of this funding will be contributed as a secured loan which, to the extent that it is not set off against further grant earned by the company, will be repayable in 1990. Such grant will be made by a contribution at a rate of 30 per cent. towards the capital costs of buildings, plant, machinery and equipment and also through per capita employment grants earned by the company against jobs created in Northern Ireland over and above the original target of 1,250. The new employment target is some 2,800 jobs.