Chamber and committees

To come back to more conventional investment, where investors have equity in the business, what are the exit strategies for them?

Perhaps I could ask one final question. We have spoken about due diligence, but that does not just stop at the point of purchase. What on-going due diligence do you maintain over such investments?

Given the nature of the purchase of this type of asset—I am not talking specifically about Prestwick or Ferguson’s—it is not surprising that, when you take it on, the value of those assets will be impaired. Presumably, you take that into account when you are taking on such a business. Things such as pension fund liabilities are a huge issue, and you are unlikely to be taking over a business that is a going concern, at least in the initial stages. Therefore, you must have a strategy to obtain value for the shareholder—or, in this case, for the public—over a period. How do you manage that? How do you achieve that?

At the start of the process you have a mechanism for determining the true value of the business that you are taking on—which might be zero, given that it will be an impaired business. There will therefore have to be some appetite for risk in taking it on, which might be covered politically or by other means in the final analysis. For example, we have talked about saving jobs and so on. However, at least in the initial stages, you will not be taking on a business that is viable. You have to be able to assess that there will be a future value in the business and that it will break even at some point, and you must do that quite quickly, because the business is in distress, and something needs to be done at that point and confidence has to be put back in immediately. How do you do that?

Yes.

I would like to explore one or two things, some of which we have touched on.

Let me ask an obvious question. You have various strategies in place in connection with the current investments. Is there an exit strategy in place for all three of the current investments that are being managed?

But, with Lochaber, there must still be some strategy to have an end date for that commitment.

How long is it?

Given that we have been into the liability for a number of years now, can you say whether it has been performing? Is it going according to expectations?

It seems like we were waiting an awful long time for that investment. How much was it?