Mr. MACLEANasked the Financial Secretary to the Treasury whether the British Cellulose Company owed the British Government £1,450,000 in 1920; whether this debt was secured by mortgage debentures; when the Government accepted preference shares in lieu of mortgage debentures; and on whoso advice was this arrangement made?
Mr. YOUNGThe sum mentioned represented the advances made by the Government during the War towards the cost of the buildings and plant required for the undertaking. It was secured by mortgage; but the whole assets of the company after the War, when it was proposed to embark on the manufacture of artificial silk, would if sold have realised1562W only a small part of the sums advanced for other purposes. It was accordingly decided, in order to assist the company in the new venture and to enhance the value of the Government's asset, to accept preference shares of the nominal value of the sums advanced in lieu of the existing mortgage and debentures, thereby saving the company from going into liquidation. This action was taken on the advice of the Minister of Munitions and of his technical advisers.
Mr. MACLEANasked the Financial Secretary to the Treasury whether the British Government holds £1,450,000 preference shares in the British Cellulose and Chemical Manufacturing Company; whether this company has lost over £1,000,000 during the last two years; whether a scheme for the reconstruction of the company has been submitted providing for a holding company with £500,000 capital running the business; whether the British Government has agreed to assist this scheme by giving the new company £750,000 preference shares; whether the market price of those shares when this arrangement was made was £166,250; and whether, seeing that this action has been agreed upon without consulting this House, its consent will be asked for before those shares belonging to the British Government are given away for nothing to a private company?
Mr. YOUNGThe answers to the first four parts of the question are in the affirmative. For a full statement of the position I would refer the hon. Member to the statement made by the chairman of the company at their general meeting on Monday last. As regards the fifth part the shares, except in very small numbers, were practically of no realisable value at the time of the agreement to surrender a part of them to the parties furnishing the additional capital required to prevent, the company going into liquidation. The answer to the last part of the question is in the negative.