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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