§ Mr. Neil HamiltonTo ask the Secretary of State for Energy whether he has reached a decision about the capital reconstruction of the British Coal Corporation's subsidiary, Coal Products Limited; and if he will make a statement.
§ Mr. ParkinsonIn recent years the British Coal Corporation's (BCC's) coal derivatives subsidiary, Coal Products Limited, has incurred heavy losses, particularly as a result of the NUM strike in 1984–85. Since 1984–85 its cumulative losses have exceeded its capital of £100 million. At the end of March 1987 they stood at £143 million.
These losses were funded by British Coal, with the Government's consent, largely in the form of loans. It is clear, however, that there is no realistic prospect that BCC will recover this money, and I have therefore agreed that it has to be written off by means of a waiver of the loans due to BCC and by cancellation of the company's £22.5 million preference share capital.
I am pleased to report, however, that the management of Coal Products has now carried out a vigorous and fundamental reconstruction of its business; substantial progress has been made to eliminate loss-making activities and to make the company viable. The management is determined that the company should establish a profitable track record on normal commercial terms with BCC.
Apart from any non-deficit grants for which it might be eligible, it is intended that neither the Government nor BCC will provide further support, either by injecting further loans or capital into the company, or by way of further guarantees.