§ Mr. Henderson asked the Secretary of State for Industry if he intends to make any further progress in privatising State controlled assets during the current year.
§ Mr. Kenneth Baker:Arrangements are being completed for the offer for sale by Kleinwort Benson Limited, on the instructions of the Lords Commissioners of Her Majesty's Treasury and the Secretary of State for Industry, of 133,285,000 ordinary shares of 50p each of Cable and Wireless Public Limited Company at 168p per share, payable in full on application.
The prospectus will be advertised in the newspapers on Monday 26 October 1981 and the application list will open at 10 am on Friday 30 October 1981. The offer for sale has been underwritten by Kleinwort Benson Limited, Baring Brothers and Co. Limited and J. Henry Schroder Wagg and Co. Limited. The brokers to the offer are Cazenove and Co., James Capel and Co. and Rowe and Pitman.
Of the ordinary shares being offered for sale, 70 million are new ordinary shares which the Government have agreed—subject to the terms of the underwriting agreement—to subscribe at par, thus raising £35 million of new equity capital for Cable and Wireless PLC.
Following the offer for sale, and after deducting the shares committed to the employee share schemes, Her Majesty's Government will have a shareholding of 50 per cent. of the issued share capital of Cable and Wireless PLC plus one ordinary share.
At the time of the offer for sale, the Government are making available a maximum of 285,833 shares—approximately 0.11 per cent. of the issued share capital following the offer for sale—for the benefit of employees of the group under the employee share schemes. In addition, preferential consideration will be given to applications received from employees of the group for up to a total of 13,500,000 ordinary shares under the offer for sale at the offer for sale price on the special application forms which are being made available to them. The Government have also agreed to transfer over a period 142W of not less than five years a maximum of approximately a further 0.53 per cent. of the issued share capital following the offer for sale to the trustees of the employee share schemes. The amount transferred in any one year will be subject to the level of group profit.
We intend that the costs of the sale and of the subscription to the rights issue should be met out of the proceeds of the flotation. Parliamentary authority for this will be sought in Supplementary Estimates. Pending that approval, the necessary expenditure will be met by repayable advances from the Contingencies Fund. The gross proceeds of the sale are expected to be around £224 million of which £35 million, representing the subscription for the new shares, will be paid to the company. After deducting other costs, which are estimated to be in the region of £6 million exclusive of VAT and stamp duty, net proceeds are expected to be around £183 million.
The following is the text of a letter from the Government to the chairman of Cable and Wireless regarding the future relationship between Her Majesty's Government and the company. Mr. Alan Wheatley, a non-executive director of the company, has been nominated as a Government director.
20 October 1981
Following the Offer for Sale HM Government will have a shareholding of just over 50.53 per cent. of the issued share capital of the Company and has agreed to transfer over a period of not less than five years a maximum of 0.53 per cent. of the issued share capital to the Trustees of the Group's Employee Share Schemes. The amount transferred in any one year will be subject to the level of Group profit. After deducting the shares so committed, HM Government will have a shareholding of 50 per cent. of the issued share capital plus one Ordinary Share. HM Government, which is empowered under the British Telecommunications Act 1981 to acquire or dispose of shares in the Company at any time, intends to maintain a majority shareholding for the foreseeable future.HM Government does not intend to use its rights as a shareholder to intervene in the Company's commercial decisions. Nor does it expect to vote its shareholding at general meetings of the Company in opposition to resolutions supported by a majority of the Court of Directors, although it retains the right to do so.Under the Company's Articles of Association, HM Government has the right to nominate or appoint two non-executive Directors to the Court and HM Government has now nominated Mr. Alan E. Wheatley as a Government Director. A Government Director has no special powers and his duties, like those of all Directors, are to the Company as a whole.