BRITISH TECHNOLOGY GROUP (Hansard, 11 March 1992)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)

I am pleased to announce that an agreement for the sale of British Technology Group was entered into today, 11th March, following negotiations between Government and a management-led consortium. The initial proceeds will be £27.75 million.

The consortium represents a balance between financial institutions, individuals, and organisations. The lead investor is CIN Venture Managers Limited (CIN Ven) the second largest European Venture Capital house. (CIN Ven manages the unquoted securities portfolios of the pension funds of British Coal, British Rail and Barclays Bank). The consortium members include ten other financial institutions, BTG management and staff, and up to 13 UK universities, under the aegis of the CVCP (the Committee of Vice-Chancellors and Principals). A holding company has been formed to purchase the shares. Management and staff will participate in the company both directly, through individually subscribing for shares, and indirectly, through an employee share trust which will acquire up to 26 per cent. of the share capital. Apart from the trust, no individual member of the consortium will own more than 15 per cent. of the voting rights in the holding company.

The consortium was selected as the preferred purchaser following a two-stage competitive bidding process against a number of criteria, which arose from the objectives for the sale of maximising proceeds consistent with a good prospect for the continuation of BTG's technology transfer activities. The Government are convinced that the consortium offers the best prospect that BTG's present activities will be continued as an independent organisation.

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The proceeds of the sale will be made up from two elements. The initial proceeds will be:

	£ million
Initial consideration	14.25
Special dividend to be paid on completion	12.00
Dividend paid in February in respect of NEB	1.50
Total	27.75

The initial consideration is dependent on certain working capital requirements being met at completion, which is due to take place on 31st March 1992 provided that certain conditions of the type commonly found in share purchase agreements are fulfilled by that date.

Future proceeds will arise if over the next five years the business performs at a level in excess of the net revenues forecast by BTG management in its business plan. The Government will be entitled to 60 per cent. (less tax) of the sum by which aggregate net revenues exceed the target which has been agreed with the purchaser. Net revenues principally comprise the revenues from licences which accrue to the company less the payments which are made to inventors from those licence income streams. Further proceeds may also arise from clawback on the proceeds of sale of real property.