Select Committee on Standards and Privileges Seventh Report

Annex G

Letter to Mr Kevin Maxwell

from Mr Geoffrey Robinson MP


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 Inc—the USA subsidiary.

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 as usual.

Can we discuss urgently please.

4 April 1990

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