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Written question asked by Michael Stephen (Conservative), in the House of Commons. It was due for an answer on Friday, 24 January 1997. It was answered by Lord Deben (Conservative) on Friday, 24 January 1997 on behalf of the Department of the Environment.

Dept of the Environment

Question
If he will make a further statement on the sale of PSA Projects. - Inc figs.
Answer

Mr. Stephen: To ask the Secretary of state for the Environment if he will make a further statement on the sale of PSA Projects. [13204] Mr. Gummer: In December 1992 PSA Projects was sold to Tarmac Construction Ltd. Tarmac was paid £49.6 million as compensation for future losses and commercial risk, to provide funds for a pension fund contribution, investment and working capital. The Department retained £55 million of pre-sale trade debts which were all subsequently collected. In addition to the payment of £49.6 million, Tarmac received £10.5 million for net liabilities transferred with PSA Projects. Under the sale agreement, this sum was subject to pound-for-pound adjustment following the preparation of a completion statement which would provide details of PSA Projects net asset position at the point of sale. Tarmac presented a completion statement in June 1993 but difficulties over agreeing adjustments to this resulted in the appointment of an independent expert in October 1995 to review the completion statement and make adjustments. The independent expert has now reported on the net asset position of the business at the point of sale. As a result, Tarmac will make an adjustmenting payment to Government of £19,921,177.00p. In addition Tarmac will pay Government interest totalling £2,612,611.98p. Under the sale agreements, the Department's liability to meet the severance costs of staff who were employed in the business was limited to £39.5 million. This limit has been reached and all further costs are to be met by the purchaser. In the event of the purchaser's bankruptcy in the first five years post sale i.e., to 1 December 1997, the Department has also guaranteed the redundancy entitlements of transferring staff. The maximum value of this contingent liability is now estimated to be £10.3 million.

Secondary information

Type
Written question
Reference
13204; 288 c757W
Session
1996-97
Subjects
Contracts Debts Privatisation Tarmac Construction PSA Projects
Contains statistics
Yes