Wednesday, July 21, 2010

Misleading statements.

You will recall that the government chose to scrap an £80 million loan to Sheffield Forgemasters, a company that wanted to purchase equipment to allow it to enter a niche market for mouldings for nuclear reactors, a market currently only served by two suppliers in South Korea and Japan. When challenged on it at DPM questions, Clegg answered thus
...the new owners have been quite open about why they sought a Government loan-because, as they have publicly stated, they felt the terms they were receiving from banks were not good enough and because they did not want to dilute their own shareholdings in the company. Do I think it is the role of Government to help out owners of companies who do not want to dilute their own shareholdings? No, I do not...
Since then, it has become apparent that the owners were happy to dilute their shareholding, but not to the degree required to obtain the loan - they would have had to become minority shareholders. Accordingly, they have announced today that they will not be seeking to obtain private finance any further, so that puts an end to the plans to create more jobs, to double the firm's revenue within four years and to help contribute to Britain's export deficit by manufacturing a quality product for a niche market - exactly the kind of thing government should be enabling for the future.

What is worse is that Clegg knew that the owners were content to offer equity in return for cash investment
Graham Honeyman, Forgemasters’ chief executive, has told the deputy prime minister he was willing to dilute his share, something Mr Clegg has since admitted in a private letter to the businessman. Mr Clegg wrote: “[You] made clear to me your own willingness to dilute your equity share.”

Should he have to apologise to the House for misleading them?

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