Vol. 550 No. 5
63 Proinsias De Rossa asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has satisfied herself that a company (details supplied) complied with all the terms of the contract under which the Irish Steel plant was sold to it in 1995; and if she will make a statement on the matter. [9466/02]
The sale of the former Irish Steel Limited to Ispat was finalised on 30 May 1996. As part of the sale agreement, the following were the main commitments given by Ispat: to maintain the business for a period of five years – this commitment was adhered to; to employ an annual average of 300 permanent employees for a five year period – this commitment was adhered to; to invest £5 million working capital – this was carried out on 30 May 1996; to carry out a capital expenditure programme amounting to £20 million over a six year period, that is, until 30 May 2002 – this capital expenditure programme was still under way at the time of the closure of the plant in June 2001 and my Department was notified that expenditure was on schedule, with an amount of at least £17 million having been spent at the time of the closure of the company; to spend an amount of at least £2.36 million on environmental works – these funds had been included in the cash injection by the State and my Department was notified that the works had been carried out.
Ispat also undertook to repay two State guaranteed loans which had been taken out by the former Irish Steel Limited, one from the European Coal and Steel Community of which $14 million remained to be paid at the time of the sale, and one from the ACC Bank of £10 million. The ECSC loan was fully repaid in 1999. However, the ACC loan had not been due for repayment until 2003, but on liquidation of the company, the full amount outstanding became payable. The State has paid the ACC Bank an amount of £8.37 million in settlement of its claim under the guarantee, but the State will be fully reimbursed this amount from counter cover which was put in place at the time of the sale. This counter cover included a letter of credit for £4 million which was put in place by Ispat. Also, as part of the State aid package at the time of the sale, the State had deposited £4.617 million in a joint Escrow account with Ispat on condition that this was to be held on deposit until both the ACC loan and the ECSC loan were repaid. The funds in the Escrow account could be withdrawn by the State if it was called upon to pay out under the loan guarantees. The State has now withdrawn funds from the Escrow account in the amount of £5.56 million and is now claiming the balance of its outlay under the guarantee from the letter of credit. It is expected that the amount paid by the State on foot of the guarantee will be fully recouped in the near future.
Matters in relation to the leasehold arrangements do not affect my Department but are being examined by a group of officials from the Departments of Finance, Defence and Marine and Natural Resources.
