B.R.S. (Parcels) for Sale in October
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Disposal Board and B.T.C. Disagree Over Sale of Meat Unit : R.H.A. Scheme for Companies Dismissed: B.R.S. to Keep 400 Rhil Cartage Vehicles?
SHARES in B.R.S. (Parcels), Ltd.. are to be offered for sale next October. The organization operate over 4,000 vehicles from about 115 depots.
A disagreement has occurred between the British Transport Commission and the Road Haulage Disposal Board over the large meat transport unit of 498 vehicles which British Road Services operate in London. There was only one tender for it and the Commission recommended its refusal. The Board did not approve that recommendation and the matter has been referred to the Minister of Transport.
Some 2,000 B.R.S. vehicles engaged on contract hire are likely to bc sold as chattels without special A licences. B.R.S. are seeking to add 400 railway collection and delivery vehicles to their fleet
Disagreement with R.H.A.
The Board, who announced these developments in their fourth report for the six months ended May 28 last, give their reasons for disagreeing with the Road Haulage Association's proposals that the B.R.S. depots unsold in list 5.4. should be reoffered as companies.
In all, 131 tenders were received for 86 of the 160 units (6,115 vehicles) in list S.4. but the effective number was somewhat lower. Only 24 units (544 vehicles) were sold. The report says that the aim would be to announce decisions in June on units which attracted no bid or no acceptable bid. This object has not been achieved.
The Board stand by their previous arguments that there are few advantages in the company method of disposal. The R.H.A. told the Board that in their view the company method was the best for selling the larger units.
The Association accepted that in offering such a company for sale, it would not be possible to offer goodwill as such or to provide that the Commission should not compete with the company after sale, says the report. "Nevertheless they considered that after a period of trading before sale, established busidess connections would be shown in a company's books and that the staff of the company would develop sufficient loyalty, as well as knowledge of the company's business, to ensure continuity of the business after the sale of the shares.
" In order to acquire value as a going concern, a company would need to operate for a minimum period of six months to a year. To supplement the record of the company's trading activities for this period, estimates of the results of the activities of whatever operational depot or depots were included in it should be made and disclosed, covering a period of at least 12 months' operation as part of British Road Services before incorporation. The Association considered that there was a reasonable hope of buyers coming forward for companies on these lines."
The report continues: "The preparations for putting the shares on offer could normally be completed in two to three months. To enable trading results for a period of six (or 12) months to be shown, the company could not be Prit on offer until eight to nine (or 14 to 15) months after being set up. To delay the offering of the shares for that extra period for that .puipose would, in the Board's view, not comply with the requirements of the Act that the shares should be .offered 'as soon as is reasonably practicable.'"
According to the report, the Board and the R.H.A. both think that in most cases the shares would be sold by public tender. In that event, all the requirements of the Companies Act, 1948, applying to prospectuses, would have to be observed.
The Board doubt whether the information that could be given in such a prospectus would form a helpful or attractive picture of a going concern being offered for sale. "It is doubtful whether, for the period before the company was set up, any trading results. actual or estimated, could be given that would not be liable to mislead," the Board say.
Competition from B.T.C.
In addition, the 'company would be liable to competition from the B.T.C. after sale, as well as between its incorporation and sale. It would have little of the character of a going concern and the Board see little reason to expect that buyers would be induced to come forward or to offer a better price than for the same property offered as a transport unit.
Where the customer consents, contract hire vehicles will continue to be offered as transport units. In other instances. the Commission will this year and next year give notice of termination of vehicle hire' contracts if they are legally entitled to do so.' during that period. The Commission will notify the R.H.A. of contracts to be ended in each quarter.
This will enable the haulier and the B.T.C. to seek a new contract with the customer. Whether the Commission
obtain a new contract or not, the vehicles previously used for it will, with the Minister's consent, be sold as chattels, and any A licence held by the B.T.C. will be surrendered.
Up to May 28, 24,569 vehicles had been offered and 15,008 sold. [Including list 10, which is not covered in the Board's report, 15,720 vehicles have been sold.] Of those 24,569 vehicles, 501 have now been transferred, to the parcels organization or to the contract hire services.
400 Extra for Commission?
Out of 2.400 vehicles not offered so far, about 400 arc engaged on collection and delivery for the railways, and the Commission propose to ask the Minister to exempt them from the disposable fleet.
Apart from the 4.000 parcels vehicles and 2,000 contract-hire vehicles. there will then be about 2,000 vehicles remaining on paper, but the Commission think the true figure will be much less. Some are not in running order and in other instances the original numbers have been reduced through one heavier vehicle being substituted 'for two lighter ones.
"Whatever the final figure may be. it is clear that there is no significant further number of un-offered vehicles to be drawn on." the report comments. All but 639 of the 11,101 vehicles offered without premises have been sold.
In Scotland, B.R.S. are due to retain 361 out of their original 3,540 vehicles. Of the 3.179 for disposal, 1,973 had been sold when the report was prepared.
The report is published by the Stationery Office at 9d.