Letter to Mr Kevin Maxwell
from Mr Geoffrey Robinson MP
A M LOCK
The Tace offer is unacceptable. In effect they have
not budged from their opening position: £2 million down and
£2 million out of profits later. It is necessary now to find
a solution that will give:
i. AML stability and good management over a 2
year recovery period.
ii. RM/KM an attractive option for realising
a good price for AML within a two year period.
iii. GR a reasonable reward for the difficult
job to be done.
The first point requires, in addition to the continuing
commitment from GR as Executive Chairman, further management support
to AML in: Engineering; Marketing and the management of AML Incthe
GR proposes therefore a management contract between
AML and TransTec. This is the quickest and most cost effective
way to meet AML's urgent requirements. There is no point in building
up AML; it would take too long and AML is too small a company
for the 1990's.
The remuneration for the 2 year management contract
to 31 December 1991 would be:
1. An option to buy AML for £4 million at
any time up to 31 December 1990; or £5 million at any time
up to 31 December 1991;
2. 30% share of the audited combined PBT for
the two years of the management contract.
NB: Options 1 and 2 are alternatives: if the purchase
option still is not exercised in 1991, the management fee would
be paid as a lump sum in 1992 after the 1991 audit.
- During the management agreement period no senior
debt interest or dividends would be paid.
- There would be no cross-charges for expenses
from TT to AML.
- Pergamon Internal Audit controls will operate
Can we discuss urgently please.
4 April 1990