§ Mr. Parrisasked the Secretary of State for Trade and Industry if he will make a statement about Phoenix II, the proposed engineering steels joint venture between the British Steel Corporation and Guest, Keen and Nettlefold.
§ Mr. Peter MorrisonThe Government announced on 7 August 1985 their agreement in principle that Phoenix II should go ahead, as a joint venture company combining BSC's special steels businesses and GKN's special steels and forgings operations. Agreement has now been reached on a number of major outstanding issues, which should enable the new company, to be called United Engineering Steels, to start trading on 1 April 1986.
BSC and GKN will both contribute fixed assets, stocks and cash to the new company. As part of these arrangements the Government have approved the provision of funds for BSC to subscribe £55 million for preference shares and loanstock. United Engineering Steels will be a freestanding, private sector company, and it is the firm intention of BSC and GKN as shareholders, and of the Government, that it will meet all future financial requirements without further recourse to public sector finance or guarantees. The Government approval is also on the understanding that the new company will undertake further investments, particularly in continuous casting facilities.
On the information at present before him, and in accordance with the recommendation of the Director General of Fair Trading, my right hon. and learned Friend has decided not to refer the merger of the relevant BSC and GKN activities to the Monopolies and Mergers Commission. Formation of the new company is also subject to the agreement of the European Commission under the competition provisions of the treaty of Paris.