01.09.02
Treasury
agrees borrowing limit for Ä¢¹½¶ÌÊÓƵ's commercial subsidiaries
The
Treasury has agreed a borrowing limit of £350 million for
the Ä¢¹½¶ÌÊÓƵ's commercial subsidiaries, Ä¢¹½¶ÌÊÓƵ Ventures Group (encompassing
Ä¢¹½¶ÌÊÓƵ Resources Ltd, Ä¢¹½¶ÌÊÓƵ Technology Ltd, Ä¢¹½¶ÌÊÓƵ Broadcast Ltd and Kingswood
Warren Ventures Ltd) and Ä¢¹½¶ÌÊÓƵ Worldwide Ltd.
John
Smith, Ä¢¹½¶ÌÊÓƵ Director of Finance, Property and Business Affairs, said:
"This agreement will allow Worldwide and Ventures to invest
in new opportunities for growth and to provide a bigger return for
re-investment in Ä¢¹½¶ÌÊÓƵ programming and services, for the benefit of
the licence fee-payer."
As
part of the agreement with the Treasury the Ä¢¹½¶ÌÊÓƵ has agreed to manage
within a range of covenants designed to ensure safety levels in
all commercial investments.
A
non-trading commercial holding company will be created to hold the
shares in Ä¢¹½¶ÌÊÓƵ Worldwide and Ä¢¹½¶ÌÊÓƵ Ventures Group.
Notes
to Editors
The
Ä¢¹½¶ÌÊÓƵ's commercial subsidiaries exist to exploit Ä¢¹½¶ÌÊÓƵ assets in the
market place to provide a cash-flow return to supplement the income
from the licence fee for re-investment in programmes and services.
The
Ä¢¹½¶ÌÊÓƵ's Fair Trading Commitment ensures there is no cross-subsidy
between public service and commercial activities.
Ä¢¹½¶ÌÊÓƵ
Worldwide has a target of quadrupling the cashflow it delivers to
the Ä¢¹½¶ÌÊÓƵ over the 10 years to 2006.
Last
year it delivered £106 million on turnover of £660 million.
Ä¢¹½¶ÌÊÓƵ
Ventures Group expects to record its first profit this year.
This
agreement allows the Ä¢¹½¶ÌÊÓƵ's commercial subsidiaries to borrow up
to £350 million from investment sources, not from the Government.
The
covenants attached to the borrowing facility ensure that the debt
cannot exceed three times the subsidiaries' earnings and neither
can it exceed 80 per cent of the value of the commercial group's
assets.
The
Ä¢¹½¶ÌÊÓƵ's public service operation is funded by the licence fee, currently
£112 (colour) or £37.50 (black & white).
The
Ä¢¹½¶ÌÊÓƵ's public service borrowing limit of £200 million is not
affected by the new agreement.
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