Vol. 452 No. 4
7 Mr. B. O'Keeffe asked the Minister for Enterprise and Employment the grants which were provided for Sunbeam Industries Limited; the conditions which were attached to these grants; and the amounts invested by the directors and shareholders of this company. [7417/95]
77 Mrs. O'Rourke asked the Minister for Enterprise and Employment if he has considered an investigation under the provisions of company law into the way in which the difficulties at the knitwear division of Sunbeam Industries arose; and if he will make a statement on the current status of the State's preferential shareholding in Sunbeam. [88203/95]
80 Mr. B. O'Keeffe asked the Minister for Enterprise and Employment the reason the State did not intervene to prevent the demise of Sunbeam Knitwear Limited in the same way as it intervened with Packard Electric. [6141/95]
I propose to take Questions Nos. 7, 77 and 80 together.
At the outset I would like to state that Forbairt is continuing in its efforts to try to secure the future of the remaining sections in Sunbeam Industries. This business operates in a very competitive marketplace. Nonetheless, every possible avenue is being explored in the hope that a solution can be found.
On the specific issues raised in the questions I would like to state the following. A sum of £2.75 million has been invested by Forbairt in Sunbeam Industries, including Robert Andrews Textiles, mainly in the form of redeemable preference shares. In addition, a sum of £150,000 has also been made available to the company through feasibility, training, research and development grants. There are standard conditions attached to such funding. They are contained in confidential legal agreements between the company and Forbairt. They are a day-to-day responsibility of Forbairt and not something for which I am responsible. Forbairt is satisfied that the money was used for the purposes for which it was approved. However, the company has incurred on-going losses. Forbairt has been monitoring the situation very closely and it has also engaged outside consultants to carry out detailed examinations of its affairs. I have no information to indicate that an investigation under the companies Acts is needed. The level of equity invested by the directors and shareholders is a matter for agreement between promoters and Forbairt and is not a matter for which I have responsibility. The status of preference shares in the company is that usually attached to this form of share under the appropriate legal agreements, i.e. there is a coupon rate setting out the dividend payable out of its profits and, in the case of redeemable preference shares, a redemption date. In the event of a liquidation this form of share ranks after the unsecured creditors but before the equity shareholders.
I have previously informed the House that the problems at Packard related to an industrial dispute. It was not a resource issue and should not be directly compared with the serious financial problems at Sunbeam. I am satisfied that every possible effort was made to save the knitwear division of Sunbeam.
I have spoken to the company and also the chief executive of Forbairt about the overall situation at Sunbeam Industries. Efforts are still being made to try to secure the future of the company. While this is by no means an easy task I am anxious that any discussions and negotiations associated with these endeavours are afforded every opportunity to be brought to a conclusion.
Is the Minister satisfied that with a State investment of £2.75 million there are assets, as well as redeemable shares in this company, that will give at least some return to the State? On the liquidation of this company, what assets were redeemable to pay back some of the grant-aid paid out? What was the involvement of Forbairt on the board? Was Forbairt satisfied that there were redeemable assets? My understanding is that even the machinery was not in the ownership of the company but was leased from one of the other holding companies.
The issue of recovering shareholding in the event of the company not succeeding is a matter that ultimately would be for whoever was dealing with the affairs of the company. I would not have access to a statement of assets of the sort the Deputy seeks. I cannot go beyond explaining, as I did in the reply, the terms on which the grant aid was made available and the basis on which that money will be paid back to the State in the event of a wind-up.
It is quite extraordinary that the Government would be willing to invest almost £3 million in one of its agencies but that the Minister would not be in a position to say whether there were any assets to secure some of the State's investment. In regard to Packard Electric, this issue was raised because of the prancing of two Ministers at the gates of Packard Electric as against the non-appearance of either of the Ministers when it came to a serious loss of employment in the Cork area.
The Deputy is misunderstanding me. The company has assets such as plant and machinery. I do not have a valuation on those assets that I could offer to the Deputy.
Is the Minister confirming that they were held in the company that was liquidated?
I do not have that information. That is a specific question as to the location of the assets but I know the company has plant and machinery which would be——
It is important that there would be some assets when we are talking about putting State funds into a company. It is my information that there were no assets.
At the time the money was invested this company had a viability plan that saw it return to profitability. In the event, that company has sustained serious losses. The issue as to what would happen in the wind-up in relation to balancing the various unsecured and secured creditors and the preference shareholders would be a matter for whoever was dealing with the financial affairs of the company. It is not a matter for which I would be responsible to the House. I would not have the sort of information the Deputy seeks and even if I had it I would not be at liberty to make public such information. I assure the Deputy that at the time this investment was made a viability plan was produced by Sunbeam which commanded the confidence of Forbairt that the company could be turned around, that it could produce profits and secure employment. In the event, that viability plan went badly wrong and heavy losses were sustained. That was a factor that led to the closure of the knitwear division.
Will the Minister comment on the other sections of the company because questions were asked also about the viability of those operations? In an earlier reply the Minister indicated that Forbairt was negotiating with the company to ensure future viability.
Forbairt is continuing its efforts to find new investors for the remaining divisions. It is proving difficult. I cannot go beyond that other than to repeat what I said in the reply, namely, there is a commitment to make every effort to secure an investor that would give it the strength to continue. It remains to be seen whether that can be done.
Has a decision been taken by the Minister, in conjunction with his Department, not to give high priority to the retention of jobs in the textile industries? Is that a conscious decision because I understand it is?
No such decision has been made. In every situation it is up to the agencies, not the Minister or the Department, to assess the viability of various proposals put to them by different sectors. As I indicated in my reply Forbairt invested very considerable money in the plants involved——
Nothing like the money the Minister is pouring out now.
——unfortunately the investment did not work out as it had hoped. It is continuing to look at other ways in which a viable business plan can be secured for this company. The test in all cases is a viable plan that is worthy of support. It is up to the agencies to assess in the first instance the quality of the plan and put forward the proposal where Government approval is necessary. That continues to be the case and there are no favourites. The critical issue is viability.
The only favourites are in Minister's constituencies.
That is breaking new territory.
