Examination of Witnesses (Questions 697
- 699)
WEDNESDAY 3 FEBRUARY 2010
MR BILL
MUSTOE AND
MR JIM
MAGUIRE
Q697 Chairman:
Welcome to our second evidence session this afternoon and can
I formally welcome Mr Bill Mustoe, the Chairman of First Milk,
and Mr Jim Maguire, the Finance Director of First Milk. Thank
you very much for coming to talk to us this afternoon. Just before
we start, I think you have another engagement that you have to
go to, is that correct?
Mr Mustoe: We have made a little
bit more time in view of the overrun, so we are fine. Whatever
you want to do is fine with us.
Q698 Chairman:
Okay. We will try not to detain you unnecessarily long. It has
been good, though, that you were here because I think you got
a flavour of the main sorts of areas of interest. You at one time
as a business, as I understand it, were interested in ACC but
you decided not to make a bid on that. What did you learn when
you looked at ACC and came to that conclusion?
Mr Mustoe: I think the best person
to answer that is Jim Maguire because I have been with First Milk
since the end of October so I was not around at that point in
time, although I do know some of the stories, but I am sure Jim
would like to tell you.
Q699 Chairman:
Mr Maguire, what is the answer to the question?
Mr Maguire: Chairman, thank you,
I can answer that. I was probably the lead executive looking at
the purchase of that business on behalf of First Milk. We did
enter the bidding process but our investigations revealed that
the business model was fundamentally flawed. The business of ACC
was over-reliant on one customer and was therefore very vulnerable
when that contract came up for renewal, which I think was for
a three year period. Our estimate at the point that that business
was for sale was that it needed further investment of around £36
million just to bring the factories up to speed.
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