There has been much comment, both in the media and elsewhere, on the question of the State's residual shareholding of 30.4 per cent in Greencore. I would now like to report on the factual situation to the House.
I would first like to deal with the issues of the shareholding limitation of 15 per cent and the national sugar quota, both of which are safeguarded by the special shareholder.
The Irish sugar quota — and I want to emphasise that this is a national quota — is allocated by the Department of Agriculture, Food and Forestry and is not the property of Greencore. It cannot and will not be transferred elsewhere.
The Sugar Act, 1991, provided for the holding of a special "golden" share in Greencore by the Minister for Agriculture, Food and Forestry. The purpose of this share was to protect the sugar quota when the State's holding fell below 50 per cent.
The share confers certain exclusive rights on the Minister and the Act prohibits him from disposing of this share. It would require an Act of the Oireachtas for this share to be disposed of. There is absolutely no question of the Government bringing forward any such amending legislation. Let me emphasise this — the protection afforded by the golden share will remain fully in place irrespective of whatever decision is taken in relation to the State's residual shareholding in Geencore.
The rights of the special shareholder are set out in the articles of association of the company. The Greencore offer for sale document made specific reference to these rights and drew particular attention to the following:
Without the consent in writing of the holder of the special share (i.e. the Minister for Agriculture) there can be neither a change in the rights attached to the special share nor a change in the limitations on shareholdings.
In particular, the prior consent in writing of the special shareholder (the Minister for Agriculture) is required for (inter alia) any resolution to authorise the sale, transfer, or disposal of the majority of the issued share capital of Irish Sugar, any sugar quota held by Irish Sugar, or more than 20 per cent of Irish Sugar's fixed assets used in the production of processing of sugar
Let me deal now with the 15 per cent limitation on shareholdings in Greencore. This limitation is not provided for in the Sugar Act, 1991, but is, rather, enshrined in the company's articles of association. Article 11 (b) provides that "no person shall be entitled to acquire or to be Holder of Shares representing more than 15 per cent of all shares then in issue".
As indicated in the prospectus, any change in this limitation on shareholding first requires the prior written consent of the special shareholder. An extraordinary general meeting of the company, requiring 21 days' advance notice, would then have to be convened. Any resolution proposing amendment or abolition of this limitation would have to be adopted if required
Last week, at my post-budget press conference, I elaborated on the reference in my Budget Statement that receipts of £150 million in respect of asset disposals were included in the budgetary arithmetic. I said that it was the Government's intention to proceed with disposal of certain State assets, including its residual shareholding in Greencore. In preparing for an eventual disposal, my Department had sought advice from Davy Stock-brokers, the Department's advisers on the State shareholding in Greencore, on how best to approach the issue. On the basis of the market information then available, it seemed that share placement was the appropriate way to proceed. There were absolutely no contacts between the Department and its advisers and multinational companies on a possible share purchase and no such contacts were mooted. I was, however, aware of Greencore's stated strategy of growth through acquisitions and was naturally anxious to ensure that the State, when eventually disposing of its shareholding, would do so in a manner which would be supportive of the company's declared strategy.
Greencore had, I understand, contacts over recent months with a series of potential trade purchasers of the State's shareholding. Neither I nor my Department were privy to these contacts or even aware of them. On 16 February 1993 the company advised my Department that it had identified a US-based major food company which was interested in acquiring virtually all of the remaining shares. It described this company as the ideal partner for the growth strategy planned by Greencore. I met with a representative of the company on 18 February but made it clear that I was not in a position to address sale of the State's shareholding until after the budget.
The proposal was that I should sell 25 million shares to the company identified by Greencore and to sell the remaining shares at a later stage. Before the Government had an opportunity to consider the proposal, several Irish food companies expressed interest in acquiring the Government stake. As a result the takeover panel will need to monitor transactions in the shares of Greencore.
An Irish company with an international market in its shares has to be seen to adhere to the highest standards. The takeover code is a voluntary set of rules which all companies of good standing in Ireland and the UK adhere to.
An important principle of the panel is that any party acquiring a 30 per cent stake or more is bound to extend an offer to all shareholders on the same terms. In the event that someone makes such a purchase, or enters into discussions regarding such a purchase, an offer period is created. The implications of an offer period mean that the panel will monitor all transactions carried out by certain parties during the period. This would comprise all holders of more than 1 per cent of the share capital of Greencore and all connected parties, including all advisers to any party considering a purchase in excess of 30 per cent.
The other implication of an offer period relates to any information made available by the company to any party intending to acquire more than 30 per cent. The panel rules would insist that any such information would be made available to all other parties who have shown a similar interest. These provisions should not create problems for the process in hand.
As I indicated in a press release issued yesterday, the Government has decided to afford time to all interested parties to put foward proposals, which should reach my Department by Wednesday, 24 March.
The criteria on which decisions will be based will include price and compatibility and the long term strategic development of Greencore as a major Irish food company which could consolidate and expand employment in the Irish economy.
My concern now is to achieve the receipts from asset disposals which have been provided for in the Estimates for public spending in the current year and to obtain a fair price for the State. My equal concern is to enhance the capacity of the company to grow and develop, which can only be in the interest of its employees, farmer suppliers, shareholders and the economy.
While the Sugar Act, 1991, empowers the Minister for Finance, following consultation with the Minister for Agriculture, Food and Forestry, to dispose of shares held by him in Greencore, I will keep the House informed of developments.