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Dáil Éireann díospóireacht -
Tuesday, 24 Feb 1998

Vol. 487 No. 6

Written Answers - Employee Shareholding Schemes.

Ivan Yates

Ceist:

51 Mr. Yates asked the Minister for Public Enterprise the option, if any, there will be for employees to obtain direct ownership of the shares purchased under the proposed employee share sale in Telecom Éireann by not having to participate in the proposed trust to be established; the option, if any, there will be for them to retain their shares when employees retire; the way in which it is proposed that retired employees will be catered for in these circumstances; and if she will make a statement on the matter. [4523/98]

Derek McDowell

Ceist:

119 Mr. McDowell asked the Minister for Public Enterprise if her Department has agreed to the proposals relating to the sale of up to 9.5 per cent of the equity in Telecom Éireann to the workers in Telecom Éireann; if the terms and conditions of the sale have been agreed; if the price relating to the value of the sale has been agreed between her Department, the shareholders in Telecom and the Department of Finance; and if she will make a statement on the matter. [1945/98]

I propose to take Questions Nos. 51 and 119 together.

My Department is currently engaged in an intensive series of negotiations with the union coalition in Telecom Éireann on an employee share ownership plan for employees. While good progress is being made in the discussions, the negotiations have not yet reached a stage where final agreement has been reached. I remain confident that agreement will be reached soon.

As the Deputy will be aware, the Government is prepared to make available up to 5 per cent of the company's equity to the employees in return for the verified implementation of restructuring, specified cost reduction and change within the company. The Government is also open to practical and feasible proposals by the employees to bring their shareholding in the company up to 14.9 per cent in return for cash payment to the Exchequer on transfer at a fair price when it is satisfied that this will assist the future development of the company and that the conditions relating to the initial shareholding of up to 5 per cent are satisfactory.

It is envisaged that shares wil be made available to employees through employee share ownership programme involving trust schemes and structures which offer employees favourable tax treatment for the purchase of shares in their company and which ensure that shares are allocated to employees in a tax efficient way.

The fair price to be paid by the employees for the shareholding of up to 9.9 per cent will have regard to a current market valuation of the company, an exercise which is currently being undertaken by Morgan Stanley, the financial advisers engaged on the project by my Department.

My colleague, the Minister for Finance, and I in conjunction with our financial advisers, are working with the union coalition in identifying an efficient financing structure to fund the acquisition of shares by the employees.
Aside from valuation and price issues, there are a number of other matters of a complex nature which are being addressed in the negotiations, including the legal architecture of trust arrangements for holding the employees' shareholding and how to deal with new employees joining the company and employees who retire. A mechanism is needed also to verify that company transformation is being implemented. It is not intended that the scheme will apply to persons who have already retired from the company as employee share ownership programmes are designed to incentivise existing employees.
As I have indicated previously to the House, the sale of any shareholding beyond 5 per cent to the employees will require the consent of KPN/Telia, the strategic partners in Telecom Éireann and they are being kept fully up to date with developments in the discussions.
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