§ Mr. Arnold
asked the Secretary of State for Northern Ireland if he will make a statement about the implications of the decision of Lear Fan Ltd. to cease trading.
Dr. Boy son
On 23 May the board of directors of Lear Fan Limited resolved at a meeting in Los Angeles to cease trading.
I understand the directors took this decision because of continuing delays encountered in obtaining certification of the Lear Fan 2100 aircraft and the steep decline in the market for executive turbo-prop aircraft which had resulted in a serious deterioration of the long-term prospects of the company.
On 28 May the company indicated that it would be making an appropriate filing under the United States bankruptcy code. On 29 May the Government appointed Mr. Michael Jordan of Cork Gully as receiver under Her Majesty's Government's first fixed and floating charge to 86W secure the company's assets in Northern Ireland and to represent the Government's interests in the assets and technology in the United States.
At 23 May 1985, a sum of $4.79 million was still to be provided by the Government, under the 1982 financial assistance agreement. As a result of the company's decision to cease trading the Government were released from this remaining funding commitment. The private investment consortium, Zoysia Corporation (since 1982 principal shareholders in the holding company of Lear Fan Ltd.), had, earlier, fulfilled all its funding commitments under the 1982 Agreement.
The amounts committed by Her Majesty's Government to the Lear Fan Project are as follows:
Funding prior to September 1982 £25.32 million Under the September 1982 Agreement £17.87 million
In addition, between 1980 and 1985, payment of non-selective assistance under training, temporary short-time working, key workers, security staff and redundancy payment schemes were made totalling—£1.28 million.
On 28 May the Ulster Investment Bank recalled its loan to the company of $15 million (£11.81 million pounds sterling). This loan had been guaranteed by the Government in July 1980 and the guarantee was renewed in October 1982 as part of the September 1982 financial assistance agreement. With repayment of this guarantee the total amount investment by Her Majesty's Government in the Lear Fan project is £56.28 million. Private investment since 1979 totals about $100 million.
The receiver will advise the Government as to the value of the company's assets but it is already clear that the company has no major financial resources from which a substantial proportion of the total investment could be recovered. The position with regard to the technology is complex involving the Government and other parties. The Government are taking legal advice on this matter.
The sums invested by the Government and the private sector essentially represented venture capital in develop-ment of a high-technology project. It is a great disappointment that the company was not able; to overcome the technical problems within the timescale required for a successful commercial development.
The failure cannot in any way be blamed on the Northern Ireland work force. Indeed, its loyalty and contribution to the project is to be praised. Had this high-risk venture, which has involved substantial private investment, succeeded, it would have contributed greatly to employment and to the economy of Northern Ireland.