§ Mr. Sternasked the Secretary of State for Trade and Industry what steps he is taking to prepare for the privatisation of Rolls-Royce Limited.
§ Mr. PattieThe Department announced on 11 July that Samuel Montagu and Co. Ltd. had been appointed to give preliminary advice to the Government on the privatisation of Rolls-Royce Ltd. I have now received its advice and confirm that, subject to market conditions, the Government intend to privatise Rolls-Royce before the end of the present Parliament.
Before privatisation it will be necessary for Rolls-Royce to be re-registered as a public limited company. Preparatory to re-registration, Rolls-Royce will apply to the court for confirmation of a reduction of capital under section 135 of the Companies Act 1985. A resolution to reduce the share capital was approved at an extra-ordinary general meeting of the company on 7 November.
The proposed reduction of share capital will take the form of a reduction in the nominal value from £1 to 25p of each of the 600,000,000 authorised shares, of which 508,000,000 are issued. This will reduce the nominal value of the issued share capital by £381 million, to £127 million. £372 million of the reduction will be utilised to eliminate the company's deficit on distributable reserves at 31 December 1984. The balance of £9 million will be credited to a non-distributable reserve.
At present, Rolls-Royce operates with the backing of assurances, first given by the hon. Member for Woking (Mr. Onslow) on 22 February 1973 and confirmed by successive Governments, that the Government would ensure that the debts of the company would be met in the extremely unlikely event of a liquidation. The Government intend to ensure that on privatisation Rolls-Royce will have an appropriate capital structure for it to operate in the private sector without the need for such Governmnt assurances. I shall make a further announcement about this in due course.