ASSOCIATED BRITISH PORTS (Hansard, 2 February 1983)

§ Lord Lucas of Chilworth

Arrangements have been completed for the offer for sale by J. Henry Schroder Wagg and Company Limited and Kleinwort, Benson Limited on the Secretary of State for Transport's behalf of 19,600,000 ordinary shares of 25p each of Associated British Ports Holding PLC at 112p per share, payable in full on application. This represents 49 per cent. of the issued share capital of the company. 907WA The offer for sale has been underwritten by J. Henry Schroder Wagg and Company Limited and Kleinwort, Benson Limited. The brokers to the offer are W. Greenwell and Company and Cazenove and Company.

The prospectus will be available in the Library from today. It will be published in newspapers, and copies will be available to the public, on Friday. The application list will be open at 10 a.m. on Wednesday, 9th February.

In addition to owning all the issued equity capital of the company, my right honourable friend owns two loan securities issued by the group to the value of £25 million. These are to be redeemed on or before 31st March.

The Government have arranged for a maximum of a further 1,000,000 ordinary shares to be made available. free of charge at the Government's expense, to employees of Associated British Ports Holdings PLC and its subsidiaries who are eligible under the terms of the Associated British Ports Employee Share Ownership Scheme. Each eligible employee will initially be offered 53 ordinary shares, worth approximately £60. The balance of the 1,000,000 will be available, on a one-for-one basis, to employees who purchase shares at the offer price, up to a limit of 225 free shares per employee under this matching arrangement, and subject to scaling down if the limit of 1,000,000 free shares would otherwise be exceeded. All shares acquired by eligible employees under these arrangements must be held on their behalf by the trustees of the scheme and will be subject to restrictions on their subsequent disposal.

In addition, preferential consideration will be given to applications by employees to purchase ordinary shares at the offer price. However, out of the 19,600.000 ordinary shares being offered for sale, a maximum of 1,250,000 will be available for this preferential offer and for shares purchased by eligible employees under the one-for-one matching arrangements.

So far as possible, the Government's intention of promoting the widest possible ownership of shares will be taken into account when making allocations in the event of over-subscription.

Immediately after the offer for sale, the Government will hold between 48.5 per cent. and 51 per cent. of the issued share capital of the company, depending on the number of free shares allotted to eligible employees under the arrangements I have described.

The Government intend to meet their share of the costs of the sale out of the proceeds of the flotation. Parliamentary authority for this will be sought in a spring Supplementary Estimate for the sale of Shares in Associated British Ports Vote, Class VI, Vote 6. Pending that approval, the necessary expenditure will he met by repayable advances from the Contingencies Fund.

The following is the text of a letter, dated 1st February, which my right honourable friend has sent the Chairman of Associated British Ports Holdings PLC about the future relationship between the 908WA Government and the company and the Government's policy towards the ports industry:

"HM GOVERNMENT AS SHAREHOLDER

"Following the Offer for Sale, HM Government will have a shareholding of between 48.5 and 51 per cent. of the issued share capital of the Company, depending on the number of free shares that are taken up by employees under the Associated British Ports Employee Share Ownership Scheme. HM Government does not intend to reduce the level of its shareholding in the Company in the lifetime of this Parliament. It will not purchase shares in the Company following the Offer for Sale, and does not expect to acquire shares through the exercise of its powers contained in the Industry Act 1972 (as amended).

"As the sole beneficial owner of the share capital of the Company before the Offer for Sale, the Secretary of State appointed its first Directors. However, HM Government does not henceforth intend to exercise its rights as a shareholder to elect directors to the Board, to intervene in the commercial decisions of the Group, or to vote in opposition to a resolution supported by a majority of the directors. But HM Government will be prepared to use its voting rights as a shareholder in exceptional circumstances or when it considers the national interest may be involved.

"HM Government will not guarantee or otherwise stand behind the Group's borrowings or provide any financial support other than that which is statutorily available to all ports.

"HM GOVERNMENT'S POLICY TOWARDS THE PORTS INDUSTRY

"HM Government believes that port users are best served by allowing ports to compete with each other on price and quality of service, and that the distribution of traffic and the pattern of future developments should be determined primarily by commercial considerations. It follows that HM Government does not consider it appropriate to attempt to lay down a detailed plan or framework for the operation and development of Britain's ports. Nevertheless, because of the important position of ports in the national infrastructure and their statutory responsibilities and obligations, HM Government cannot wholly divorce itself from the industry's longer term development.

"It is for port authorities to decide their own capital investment plans. However, under the Harbours Act 1964, Ministerial approval continues to be required for major port investment projects, currently those over £3 million. Under this Government, only one such application, for Falmouth, has been refused authorisation.

"Ports should look to the market for any necessary borrowing to finance their business. However, HM Government accept that there may be circumstances where a statutory port authority is unable to raise finance from commercial sources. In such a case, HM Government will in principle be willing to consider making a loan for a viable project if it believes that refusal to do so could place the port 909WA authority in breach of its statutory duty as a port authority.

"The structural changes in the industry and the resultant problems of surplus labour have created exceptional financial difficulties for the port authorities of London and Liverpool. HM Government has made available financial assistance of up to £360 million for measures to reduce the manpower of the Port of London Authority ("PLA") and the Mersey Docks and Harbour Company ("MDHC") and to enable those ports to continue in business while these measures are being taken. Of the £360 million, HM Government has already paid or undertaken to pay some £286 million. This includes the recently announced reduction in the two authorities' debts of up to £84 million. HM Government has also recently confirmed that it would not make cash grants for revenue deficits after the end of 1982. 910WA It has agreed to continue to meet the cost of severance payments and to make loan finance available for justified capital projects until it judges that the two port authorities can make their own independent financial arrangements. HM Government will also guarantee overdraft facilities to cover normal trading fluctuations.

"HM Government has emphasised that the problems facing the PLA and MDHC are exceptional in their scale and nature. It has been necessary, as their market share has fallen, to reduce their capacity and thus help to reduce the overcapacity in the ports industry as a whole. It is HM Government's firm intention to bring this assistance to an end as soon as possible and it does not propose to make similar assistance available to other British ports."