Vol. 450 No. 7
1 Mrs. O'Rourke asked the Minister for Enterprise and Employment if the Government intends to sell its full shareholding in Irish Steel; if so, the legislative, financial and employment implications; the timeframe for completion of the agenda for Irish Steel; and if he will make a statement on the matter. [5756/95]
I have appointed IBI Corporate Finance Limited to advise on the possible sale of shares in and control of Irish Steel Limited. The overall objective is to sell at least a majority stake in Irish Steel Limited, with the State keeping a minority stake. Notwithstanding this objective, offers for up to 100 per cent will also be considered. The question of granting a percentage shareholding to the workforce will be explored with potential investors.
The overall objective of seeking a strategic partner is to secure the future viability of the company. However, because it is not possible at this stage to predict the exact nature of any investment proposals which may be received, it is not possible to state what the legislative, financial and employment implications will be. Any prospective strategic partner will be expected to contribute to the investment programme in the company and will also be expected to give undertakings in relation to the retention of employment in the company.
While it is difficult to be exact in this matter, it is my expectation that negotiations to secure an investor in Irish Steel Limited should be completed by the summer. Similarly, it is expected that the question of EU approval of the investment proposals in Irish Steel Limited should be determined in a broadly similar timeframe. However, the company's viability plan envisages a timeframe for full implementation until the middle of 1997.
The Minister has indicated the IBI Corporate Finance Limited has been appointed to advise him and that the sale of a majority shareholding in Irish Steel has not been ruled out. There is also a possibility that all the shares will be sold. I am glad this is now out in the open and the position has been made plain. I hope everyone realises the legislative and other implications. What are the terms of reference of the company which the Minister has asked to advise him on this matter and the timeframe within which it is working? It is well known that an Italian firm has expressed an interest in Irish Steel. Will the Government invest between £50 million and £70 million before agreement is reached with a prospective partner? In other words, will a potential buyer assume control of the company following a massive State injection?
The State will not hand over any massive sum to any potential investor. In the application which has been submitted to the European Union a maximum has been set on the amount the State may inject in the context of achieving the company's viability plan on our own. Any prospective partner will be expected to participate in the investment programme. The investment programme envisaged under the viability plan spans a number of years and each element will be subjected to a cost benefit analysis before any taxpayers' money is invested. There is no question of any money being handed over to any potential investor. The terms of reference of the Investment Bank of Ireland Corporate Finance Limited are to seek to determine as quickly as possible if any of the potential strategic partners wishes to proceed with a serious bid for the company and to assess that bid on behalf of the State.
I understand the IBI Corporate Finance Limited will be acting on behalf of the State but I am still unclear whether Irish Steel is to be sold. We have heard for the first time that all the shares in the company may be sold. The Minister has not given me a clear answer. Will any potential purchaser receive the benefit of any State investment and at what point will it assume control? In other words, will the State invest in the company, control of which will then be assumed by a potential purchaser who perhaps will run it down after a period and have no brief to retain employment? The workforce is highly motivated and the level of employment has been stabilised. To put the minds of the public at ease and to remove uncertainty, will the Minister elaborate on the answers he has given?
It will be part of the brief of the Investment Bank of Ireland Corporate Finance Limited to secure all elements of the agreement, including commitments in relation to the retention of employment. There is no question of the State handing over money without a firm investment agreement within a potential partner which will pin down the respective contributions of each party. The advisers who represent my Department and the taxpayer will be determined to secure a fair deal in any negotiations. Any prospective strategic partner will be expected to contribute to the investment programme in the company and will also be expected to give undertakings in relation to the retenton of employment in the company. They are critical features about which the Deputy has expressed concern and they are covered by the brief given to the advisers.
In a press announcement the Minister stated that he had received Cabinet approval to invest in the region of £50 million to £60 million in the company. I do not know the exact figure. May I take it that the sum to be invested is not sacrosanct, that it will depend on the number of shares sold to a potential purchaser? Will the Minister elaborate on the timeframe involved? We were told that the negotiations would be completed by last October, then December and March and now the Minister is talking about the summer.
In the context of the viability plan presented by the company the Government has applied to the European Union for permission to invest in the company up to a maximum figure which is specified in the application. There is no suggestion that the Government will invest this amount. Any drawing down of State money is related, in the first instance, to whether a partner is found. In the event of a partner not being found it is related to a detailed assessment of each capital project. The Government decision has set a maximum figure in the context of a solely Government-owned Irish Steel viability plan. Clearly, in the context of having partners, that would be an entirely different figure. The timeframe is as I have indicated. Obviously, we will work to a tight timeframe but negotaitions will have to be conducted with the various interested parties. A realistic period by which we would know where we stood in relation to a potential partner would be the summer.
