Vol. 500 No. 4
29 Mr. Stanton asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans, if any, she has regarding the future of Irish Fertiliser Industries Limited; and if she will make a statement on the matter. [4434/99]
144 Mr. Stanton asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans, if any, she has regarding the future of Irish Fertiliser Industries Limited; and if she will make a statement on the matter. [4465/99]
I propose to take Questions Nos. 29 and 144 together.
The State, through NET, has a 51 per cent shareholding in Irish Fertiliser Industries, with the remaining 49 per cent owned by ICI. During 1998 both shareholders agreed to seek a joint sale of 100 per cent of IFI. Since then, discussions have being ongoing between my Department, the Department of Finance, IBI Corporate Finance, who is advising and assisting the State in relation to the proposed sale, and ICI executives.
Considerable progress has been made in recent months and IBI Corporate Finance has in the past week approached potential interested parties to ascertain the likely level of interest in acquiring IFI. Subject to agreement between the shareholders that this initial round of contacts demonstrates there is sufficient interest in the market to justify proceeding at present, an information memorandum will be issued in the coming weeks to those parties who have expressed an interest and have signed a confidentiality agreement.
Despite the current difficult conditions in the fertiliser industry, I am anxious to test the market at this stage with a view to securing a purchaser with a commitment to IFI as a fertiliser manufacturer and seeking safeguards regarding IFI operations and levels of employment.
Will the Minister guarantee that the three plants will be kept open as a going concern? Will she include that as a proviso? What is she doing to ensure employment is kept to a maximum?
It is important that not too many preconditions are laid down. However, employment maximisation will be crucial to any decision made. We do not want someone to buy the plants and then close them down. I do not know if the three plants can be maintained. We have not yet had feedback from interested parties. I hope that will be forthcoming. Maximising employment will be the number one priority, and I have given that assurance to the union representatives I have met. I have undertaken to meet them again when we have more information.
It may well be the case that the market conditions are not right at the moment to continue with the sale or to proceed along the lines of selling. It is a bad time in the fertiliser industry, and I do not know if there will be a good time in the foreseeable future. It may well be the case that, after IBI Corporate Finance reports it has spoken to interested parties, we may not proceed at this time with the sale. There must be a reasonable return to the Exchequer because all this has cost close to £400 million since the early 1980s. There must be a return which would warrant disposing of the company. Employment maximisation would certainly be the number one priority.
What figure does the Minister have in mind for the sale? In asking that I do not want to put her in a position where she will tell us the price she is negotiating. What is the net debt at the moment and what does the Minister intend to do about it? How does she intend to handle it pending the sale of the company? What is ICI's position if the company is sold? Is the Minister aware of the position regarding the company's substantial pension fund? Will she give some guarantee that it will be safeguarded in the event of a sale?
I do not have the figures for the debt but, adding it to depreciation and other costs, we are talking of a sum well in excess of £300 million, which is the amount this matter has cost since the early 1980s. That is extraordinary. The debt will obviously have to be taken over by the State. The company is worth nothing in the region of £300 million. I do not want to say what valuations we have been given because we want to get the best price. However, it falls far short of any such figure. I am aware of workers' concerns regarding the pension fund. That is a matter we would want to protect in any sale.
While the agreement requires ICI to give the Government first option, it has no intention of buying the company's 49 per cent stake. We want to move together and there is an agreement to that effect. I have no reason to believe ICI will change its mind on the issue. We have had discussions with its chairman and officials are having ongoing discussions with its company executives. We have agreed to move towards its disposal together, which makes sense. Anyone who is interested in acquiring this company will want 100 per cent of it.
Has the Minister prescribed a figure for fees associated with advising on this development? Have there been changes to the board recently, and if there have, can she tell the House what is the position in this regard? On Deputy Stanton's point about the pension fund, the Minister said she wanted to protect it. Has she been advised that whatever the rest of the outcome, pension fund contributions are protected?
I do not know the legal position in relation to the pension fund. The matter has been raised with me and we want to protect it as far as we can. I will revert to the Deputy when I get some legal clarification on the issue. There has been a change of chief executive at IFI. Is that the information referred to by the Deputy?
No, I was querying whether there were recent board changes or whether they were contemplated.
I have not contemplated any changes to the board.
To the board of NET?
Appointments to the boards of NET and IFI have been made in the past 18 months since I became Minister. Other than vacancies which arise normally, I am not contemplating any changes at the moment.
Did the Minister do a Deputy O'Rourke?
It is not worth anything like £5 billion.
What about the fees?
An initial fee was agreed with IFI. To the best of my knowledge we have not agreed a fee as regards disposal; if we go down that route I intend to agree fees in advance.
Is the Minister aware that the answer she gave today nearly mirrors the answer given on 1 October 1998, when it was stated that an information memorandum would be circulated to prospective purchasers? This sounds like the same answer the Minister gave today. Is she disappointed more progress has not been made? Will she confirm that the State-guaranteed NET debt is £167.95 million? Is that figure included in her Departmental budget? If the company is sold, as she is proposing to do, how will that money be found? Has she had any discussions with the Department of Finance about finding this money?
The debt relates to NET, not IFI and obviously they are separate companies. I envisage, as is normal in these circumstances, that the debt will be taken over by the State. The debt at the moment is about £172 million and this is rising quite rapidly. It is likely to rise to over £180 million very shortly.
In three months.
Yes. As regards the delay, these matters take a considerable length of time. There were protracted discussions between both sides on the share-out of the sale. The State wanted to do better than 51 per cent and we reached an agreement on the State return, which took some time. I am advised that from the time the information memorandum is prepared, if the interest is sufficient to warrant it, it will be about 20 weeks to full disposal.
Four million pounds in three months. Is it rising at that rate?
Why?
Because of the pay-over in relation to gas and fertiliser prices generally.
It is rising by over £1 million a month.
No one will buy that company.
They will not be buying the debt.
