Dáil Éireann debate -
Thursday, 3 Jun 1993

Vol. 431 No. 8

Adjournment Debate. - GPA Group Takeover.

Mr. Rabbitte:

I thank the Ceann Comhairle for allowing me to raise this important matter. Before the General Electric takeover of the GPA Group the Government decided on 20 March that it would directly take up Aer Lingus's rights and that the proposed $20 million investment would be channelled through Shannon Development. I presume the gesture was designed to send out positive signals to the other shareholders at a time when GPA could not access any further funding from banks or from the bond markets until a feasible restructuring plan was put in place acceptable to the creditors.

Whatever the wisdom of that decision — and my party shares the widespread concern at the decline in the fortunes of GPA — it must be re-examined in the aftermath of the GE takeover. I am not merely concerned about GPA's future in Shannon but I am acutely concerned for the successful continuation of Shannon Aerospace owned in three equal shares by Swissair, Lufthansa and GPA.

I have a number of questions for the Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke. Does the Government decision to inject $20 million of taxpayers' money into GE-GPA still stand? Have the Minister and SFADCo carried out a due diligence study of the group? Is it the case that GPA's assets are between 58 per cent and 77 per cent of company debts? Can the Minister assure the House that GE is not engaged in asset stripping the best assets to pay off bond holders? Is it the case that while stripping the assets GE is taking no responsibility for the debts? Does he agree that secured creditors and shareholders are getting the worst deal and only shareholders directly exposed will invest in the new arrangement? In particular, may I ask the Minister if her Department has a copy of the GPA submission of 13 May to the American Securities Commission? May I also ask her if she has a copy of the M. J. Whitton analysis of 21 May?

I am sure the Minister would agree that it is no more than prudent management on the Government's part to have answers to those questions before $20 million of taxpayers' money is put at risk.

I should also like the Minister to say whether any discussions have taken place with the principals of Shannon Aerospace. Is it the case that Shannon Aerospace is dependent on GPA? I think not. Although it was ostensibly set up to service the GPA short-haul fleet, less than 30 per cent of this fleet operates in Europe. Much of the current order book is for maintenance of non-GPA aircraft. Swissair appears to be finding most of the business for Shannon Aerospace and contributing most in terms of management. The extent to which the future of Shannon Aerospace is inextricably linked to GPA must be examined by the Government.

The retention of wealth-creating jobs at GPA and Shannon Aerospace is paramount. However, due diligence studies are necessary before we can establish whether an equity injection is the best way of achieving this objective. I do not know whether the Minister is in a position to answer those specific questions. If she is not in a position to answer them this evening they must be answered before a decision is made.

Minister of State at the Department of Enterprise and Employment (Mrs. O'Rourke):

The Deputy has uniquely out-manoeuvred me with his last remark. This matter relates to the current status of the Government's proposal to invest approximately £13.7 million of public funds in GPA. As the Deputy correctly said, I am not in a position to reply to all the Deputy's questions during the course of this debate.

I thank the Deputy for raising this matter on the Adjournment. It is in the public interest that he should do so. This matter was raised in the House as recently as 13 May. I understand previous questions were replied to by the Minister of State at the Department of Enterprise and Employment, Deputy Seamus Brennan and by the Minister for Enterprise and Employment, Deputy Ruairí Quinn.

On 13 May the newpapers referred to a reported agreement between GPA and General Electric Capital Corporation in respect of a £1.35 billion aircraft transaction and a related option to purchase an equity interest of between 65 per cent and 80 per cent in GPA under certain conditions. It has been repeatedly stated since then that the Department, the Minister and the Government intend to await the outcome of discussions which Shannon Development hopes to have with GPA. The outcome of those discussions will be relayed to the Government and decisions taken.

There have been major changes in the circumstances surrounding this matter during the past number of weeks. Obviously Shannon Development is keeping in close contact with all of the relevant parties. The Department has been kept informed of developments on a confidential basis. I understand no imminent decision will be taken by Shannon Development on this matter. That is the point of concern to Deputy Rabbitte and I am sure to other Members of the House. On the one hand there is the legitimate recognition of the need to retain jobs and on the other the equally legitimate need to preserve and guard public funds. Those are the two items on the agenda, so to speak. I assure Deputy Rabbitte that no imminent decision will be taken and that there is very close contact between Shannon Development and the parties concerned and between Shannon Development and the Department. I cannot give the Deputy full answers to his specific questions across the floor of the House but I will obtain the answers for him and send them to him.