I move the following Supplementary Estimate:
That a supplementary sum not exceeding €12,489,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 2002, for the salaries and expenses of the Office of the Minister for Enterprise, Trade and Employment, including certain services administered by that Office, for the payment of certain subsidies and grants and for the payment of certain grants under cash-limited schemes.
In the absence of the Minister for Enterprise, Trade and Employment, who is away on official business, I would like to propose that the Dáil approves the Supplementary Estimate for the Department of Enterprise, Trade and Employment in the amount of €12.489 million. I thank the Whips for arranging Dáil time for the taking of this motion at short notice.
This Supplementary Estimate is needed to provide Nítrigin Éireann Teoranta with the funds which the two shareholders in Irish Fertilizer Industries, ICI and the State, acting through NET, have agreed to provide for ex gratia severance payments to IFI workers. We would wish to be able to make payments as soon as possible.
The Government and ICI believe that an orderly wind-down and liquidation is in everybody's interests and in an effort to support such an outcome we have agreed, even though there is no legal obligation to do so, to provide a sum of nearly €24.5 million to cover ex gratia redundancy payments to the workers. The State is providing €12.489 million or 51% of the fund, reflecting its shareholding in IFI and this is the amount for which Dáil approval is being sought today. ICI will be providing €12 million based on its 49% shareholding.
When combined with statutory entitlements, which will be payable by the liquidator, a total of nearly €32 million will be available for redundancy, which would be sufficient to provide average payments of over €50,000 per worker – a sum which is considered fair and reasonable in the circumstances. The exact terms for the distribution of these funds will be determined following discussions between the workers' representatives and Mr. Ray Jackson, who is being appointed as sole trustee of the trust being used for this purpose.
In addition to creating a significant fund for severance payments for IFI's workers, the State and ICI have responded positively to a particular difficulty highlighted by the unions. Specifically, the unions have pointed out that workers laid off in recent days face the prospect of severe cashflow difficulties within a short period because the company was, unfortunately, only in a position to pay wages due up to the date of lay off. In addition, it has emerged that it is likely to take a number of weeks before statutory entitlements can be paid.
In this context, the Government and ICI have agreed to provide funds immediately, which will enable payments on account to be made. These interim payments will be based on the lower of €5,000 or three months pay. Most workers would then qualify for additional payments once the basis for the allocation of the funds available has been determined following discussions between the unions and the trustee, Mr. Jackson. However, the State cannot allocate any funding for this purpose without a Supplementary Estimate. Accordingly, it is imperative that the Dáil approve this Estimate as a matter of urgency in order that we can start making payments to the workers as soon as possible.
It is very much regretted that, despite the tremendous efforts made by IFI's board, management and workforce, the company could not survive. The board of IFI decided on 15 October last that the company would have to cease trading and that a liquidator should be appointed. It felt that it had no other option in the light of the financial position in which it found itself, particularly when the two shareholders in the company had indicated that they were not in a position to continue supporting the company in the absence of a realistic viability plan.
The shareholders had for some time made it clear to the board that such a viability plan would be a prerequisite for any further financial injections to the company on top of the considerable support provided during the years. Unfortunately, the company was not able to produce such a plan and instead sought funding of €10 million to enable it to continue trading in the short-term. Even then, the board accepted that the level of funding sought might prove inadequate. The shareholders were concerned that even relatively small setbacks to the plan in the short-term would inevitably result in further requests for support.
Following the board's decision, the wind-down of the business has been taking place. I take this opportunity to pay tribute to the professionalism of the workforce which has been actively engaged in the decommissioning of the company's plants in a responsible, safe and orderly manner. It is to be admired and congratulated for this responsible attitude.
The board of IFI has called a creditors meeting for Friday next, 8 November, in the Pavilion, Leopardstown, at which it is expected that a liquidator will be appointed. The liquidator will seek to realise the assets of the company in an efficient and effective manner with a view to satisfying the debts of the company to the maximum extent. The board will also present a statement of affairs at the creditors meeting. This will give an estimate of the prospects for the payment of all creditors, including the shareholders, who had extended loans of €34 million to the company. It should be noted, however, that the actual position can only be determined with certainty when the assets of the company are realised. Both shareholders have agreed in principle to subordinate their loans to the company in favour of the other creditors.
With regard to pensions, the initial indications suggest there are serious difficulties with the scheme covering the Belfast workers. The position of the schemes covering the other workers remains unclear at this stage and it seems likely that it will take some time before the trustees of the funds can establish the full facts. Nevertheless, the position with these schemes may be somewhat better, although there may still be some problems.
It is obviously a matter of extreme concern that employees' pension entitlements may not be capable of being met by their pension funds. However, I understand the company has been meeting its obligations to the various schemes and that the difficulties stem mainly from adverse stock market movements rather than from any default on the part of the company. The recent stock market developments would have had a significant adverse impact on virtually all pension funds, although the level of this impact would obviously vary from fund to fund depending on the investment strategy followed in each case.
Pension issues are complicated and, clearly, the trustees of the various schemes will have to establish the full facts for each of the schemes and consider the range of options available to them to minimise the shortfalls that may be involved. Presumably, they will seek to maximise any possible recoveries from the liquidator or other parties. It seems likely that it will take some time for the various issues involved to be clarified.
In addition to the initiatives which the Government has taken in conjunction with ICI to provide financial assistance for the workers, the Government has been active in seeking to help the workforce find alternative employment. In this regard, the Tánaiste has ensured Enterprise Ireland, FÁS and the IDA have adopted a co-ordinated approach in response to the closure of the major IFI plants in Cork and Arklow. The approach is directed at assisting all employees affected by the closure and already under way. The co-ordinated approach has two objectives: first, to enhance and facilitate the future employment prospects of the IFI workforce and, second, to identify and support any individual who wishes to start their own business.