Clause 9. — (Valuation of Securities Quoted Before May 1966 and of New Issues.)

Bill Presented – in the House of Commons at 12:00 am on 23rd January 1967.

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Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West 12:00 am, 23rd January 1967

I beg to move, Amendment No. 59, in page 10, line 10, after 'section', to insert: (a) except in a case falling within the following paragraph. I suggest that it would be convenient for the House to consider, at the same time, the following Amendments: No. 60, in line 12, after 'nil', insert: (b) in a case in which they consist in shares issued in consideration of the extinguishment of an equivalent number of shares in another company (being one specified in Schedule 1 to this Act) which is effected by virtue of a compromise or arrangement sanctioned under section 206 (power to compromise with creditors and members) of the Companies Act 1948 by the court, being a compromise or arrangement whose effect is that that company becomes a subsidiary of the company by whom the shares are issued, shall be deemed—

  1. (i) in a case in which the shares extinguished do not constitute the whole of a class, to be (except in a case in which, after the compromise or arrangement takes effect, a fresh issue of shares of that class is made) the same as that of shares of that class, and (in the said excepted case) what the value of shares of that class would have been had the fresh issue not been made (no regard being had, in either event, to any conversion, after the compromise or arrangement, into shares of a different nominal value of shares of that class);
  2. (ii) in a case in which the shares extinguished constitute the whole of a class, to be what the value of shares of that class would have been had they continued to exist and vested in the Corporation by virtue of section 7 of this Act.

Amendment No. 61, in line 13, leave out 'that' and insert 'the new'.

Amendment No. 62, in line 18, after '(7)', insert '(a)'.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

If there is no objection, so be it.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

The purpose of this series of Amendments is to accommodate the merger, which has been agreed, between Dorman Long, South Durham and Stewarts and Lloyds. If hon. Members have questions about the mechanics of this exercise, I will endeavour to answer them.

The effect of these proposals is to ensure that if the merger goes through, the compensation position of the present Stewarts and Lloyds and South Durham shareholders will not be prejudiced. The broad effect is to fix the compensation on the two new classes of Dorman Long shares which will be issued to the former shareholders in South Durham and Stewarts and Lloyds at the price which the former shareholders would have received had they retained their former shares.

The shares held by Dorman Long, in South Durham and Stewarts and Lloyds will, on nationalisation, vest directly in the Corporation. However, it will be open to the Corporation, as sole shareholder in the three companies, to reconstitute the merged grouping immediately after vesting day, if this is considered at the time to be desirable. It will also be open to the Corporation to extend the grouping—for example, by including Consett—and it would, of course, although this is probably unlikely, be possible to break up this grouping and group one or more of the three companies in some other way. Thus, the adoption of this group of amendments will accommodate the proposal and will, at the same time, leave the position flexible in a way that is desirable in the present position.

As for the merits of the merger, it has been generally welcomed and is regarded as being in line with the thinking of the nationalised industry as it will exist under the Corporation and as should exist with any rational reorganisation of the industry.

1.0 a.m.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

There was a certain amount of concern in the North of England regarding the Consett Ironworks and a feeling that the best kind of amalgamation would be for South Durham, Consett and Stewarts and Lloyds to be merged. There is a fear that part of the rationalisation which will take place may mean that Consett will finish. Will the Minister make a statement on that?

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

With the permission of the House, I speak again in order to answer that point. My right hon. Friend has met my hon. Friend the hon. Member for Consett (Mr. David Watkins) and other hon. Members from constituencies in the North-East who put these concerns to the Minister. They were based not at all on the merger, but perhaps on a misinterpretation of the Benson Committee's Report. There is no intention, no proposal whatever, that Consett should be closed. There is no exclusion of Consett from the grouping in the North-East. Although it would be premature to anticipate any finding of the Organising Committee, it is quite obvious that any sensible grouping of the steel industry would include Consett along with the Tees-side firms.

Not only have they had an existing exchange arrangement on orders with Dorman Long, but it is likely that all facilities, and even production planning, would be complementary for the companies involved. There is, therefore, no reason at all for people in Consett, or anywhere else in the North-East, to fear that the merger will be contrary to their interests—indeed, quite the opposite.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

First I should like to congratulate the hon. Gentleman on his remarkable foresight. I took down his words. He said that this merger will "be in line with the thinking of the nationalised industry as it will exist. "For a great many months we have been asking the right hon. Gentleman and the Parliamentary Secretary what is likely to happen. Now we have had at last a glimpse of the thinking of the new nationalised industry as it will exist.

We welcome these Amendments, which are made necessary, as the hon. Gentle- man will agree, by the initiative of the three steel companies in private enterprise. It is very much to the credit of the boards of directors of Dorman Long, Stewarts and Lloyd and South Durham that, despite their abhorrence of nationalisation, and despite the passage of this Bill, they are going ahead with this merger. They believe quite genuinely that the Government's policy of nationalising the industry will be a set-back to it, but despite this they have gone ahead with a proposal which lesser men might well have shelved until after vesting day.

Knowing the strong feelings on the question of nationalisation in the industry, the hon. Gentleman will agree that it is a great tribute to these men that they have put the industry and the nation first when certainly there would be temptation to say, "The Bill will go through, so why bother about this now?" These three companies, worth over £300 million, made 5·4 million ingot tons of steel a year and accounted for a fifth of the production. They are among the top 10 European steelmakers. It is a tragedy that they cannot be left in their own formation to get on with the job of making steel instead of being subjected to the doctrinaire prejudice of the Left-wing of the Labour Party.

Amendment agreed to.

Further Amendments made: No. 60, in page 10, line 12, after 'nil', insert: (b) in a case in which they consist in shares issued in consideration of the extinguishment of an equivalent number of shares in another company (being one specified in Schedule 1 to this Act) which is effected by virtue of a compromise or arrangement sanctioned under section 206 (power to compromise with creditors and members) of the Companies Act 1948 by the court, being a compromise or arrangement whose effect is that that company becomes a subsidiary of the company by whom the shares are issued, shall be deemed—

  1. (i) in a case in which the shares extinguished do not constitute the whole of a class, to be (except in a case in which, after the compromise or arrangement takes effect, a fresh issue of shares of that class is made) the same as that of shares of that class, and (in the said excepted case) what the value of shares of that class would have been had the fresh issue not been made (no regard being had, in either event, to any conversion, after the compromise or arrangement, into shares of a different nominal value of shares of that class);
  2. (ii) in a case in which the shares extinguished constitute the whole of a class, to be what the value of shares of that class would have been had they continued to exist and vested in the Corporation by virtue of section 7 of this Act.

No. 61, in page 10, line 13, leave out 'that' and insert 'the new'.

No. 62, line 18, after `(7)', insert '(a)'.—[Dr. Bray.]