Select Committee on Standards and Privileges Seventh Report

Annex H (ii)

Letter to Mr Kevin Maxwell

from Mr Geoffrey Robinson MP

Following our meeting on 10 April I have done an outline for the Management Agreement between TransTec (TT) and A M Lock (AML).

The management agreement gives TT every incentive to get AML profitable; TT only benefits to the extent profits are achieved. TT loses out badly if there are no profits are achieved. TT loses out badly if there are no profits. On the other hand if we can get AML back to a "reasonable" level of profits then it still remains my view that the best route for you would be via a flotation of AML with TT some time late 1991 or in 1992. Assuming combined profits of a minimum £2 m the return to you could between £6-£8 m depending on how profitable I can get AML between now and flotation. You of course, have no commitment to proceed with a flotation if you don't want to.

Our present main problem at AML is getting sufficient orders. The failure of the new digital product—the Metalcheck 10—to meet the requirements of the principle market sector for which it was designed is a major cause of our order shortfall (see my quarterly report of April). In view of the critical situation the TransTec development team have already moved in with your agreement.

The Management Agreement seems a sensible arrangement to me. Amongst the points we shall have to liaise closely on as we go along would be the need as part of the management contract to ensure that AML has its own management in the key areas before the end of 1991, if you decide against a merger and flotation with TransTec. There will no doubt be other points you will wish to raise.

I look forward to hearing from you and am at RM's or your disposal to finalise the arrangement.

3 May 1990

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