Union to meet private equity group Published: 13 February, 2007
THE British Venture Capital Association, which represents private equity firms, has confirmed that its chief executive Peter Linthwaite will meet with Paul Maloney, the GMB national secretary, probably early next month.
However, the BVCA has said that the meeting is not being held to discuss the closure of Birds Eye’s Hull factory.
A spokesman for the British Venture Capital Association told FISHupdate: “They will be talking about the issues that affect the industry in general and the interests of the members of the GMB. But they are specifically not speaking about specific deals or situations. That has not and never has been the premise of the meeting.”
The GMB has launched a campaign against private equity companies since it was announced in January that the Hull Birds Eye factory is to close. The Hull factory, which makes fish fingers and other fish products, will close in September with the loss of over 500 jobs unless there is a dramatic change of policy.
The GMB is also contacting the private equity firm Permira, which bought the Birds Eye/Iglo frozen food business from Unilever for £1.12billion, to request a meeting with managing partner Damon Buffini. Permira is one of the GMB’s most high-profile targets in its campaign.
The private equity industry and some influential businesses have reacted with alarm to calls from policy experts, economists and union officials for Chancellor Gordon Brown to reduce corporate tax relief for interest payments. Similar proposals in Denmark and Germany have already met tough opposition.
The recent growth in acquisitions has brought demands for reducing the tax advantages of businesses backed by private equity and foreign-owned companies, which can borrow more heavily than quoted companies, which are often reluctant to damage their credit ratings.
The GMB union urged Gordon Brown to end tax relief for interest payments on loans used by private equity groups to buy companies. This relief costs the exchequer hundreds of millions a year, while giving debt unfair tax advantages over equity, it said.
It claims jobs are then cut to help service these debts, hence the decision to shut the Birds Eye Hull seafood plant. The campaign comes as a group of private equity firms consider launching a bid for supermarket J Sainsbury. Private equity firms have rejected the GMB’s claims saying their strategy is to grow the companies they take over.
They also argue that the union has not considered the impact of the proposed scrapping of tax relief on interest payments which would hit all of British business’ ability to borrow to fund expansion.
British Venture Capital Association said: “The tax issues that are raised affect the whole of British industry and are not confined to private equity. It is clear that such changes could potentially lead to a very serious harming of the job-creating entrepreneurial end of British business.”
The GMB claims its campaign has already received support from “at least” 20 Labour MPs, including deputy leadership candidate Peter Hain.
Meanwilie, the union in Hull is continuing to fight to keep the factory open and that could be the main reason why it wants a meeting with the Permira boss.
GMB senior organiser John Wilson said: “We have held consultation meetings to put a package together to try to keep some production in Hull. Everyone says Birds Eye Hull has an excellent workforce and we believe there is a case for keeping the factory open .”