‘OK, so how does it work?’ asked Andy Lane. ‘It’s simple really. We want the company to end up in the hands of the employees. But they can’t afford to buy it – it might cost as much as £40,000 per person. So the company finances it. You – Loch Fyne Oysters – set up a trust for your employees. Then that trust borrows enough money to buy all the shares. In this way the trust comes to own the company, on behalf of all the employees. Simplicity itself.’ Iain McGlashan, looking sceptical, asked how the trust would repay the loan. ‘The company guarantees the loan – so the lender knows that the cash will come from the profits of the company.’ ‘But the bank won’t lend us enough money – it’ll only lend us what it can get security over, maybe one and a half million. It’ll probably take four million to buy the company.’ I explained that that was where Baxi Partnership came in. We would lend up to £2m of risk money. The bank would get priority and we would come behind the bank. ‘So you buy shares?’ ‘No, the point is that all the shares are owned by the employees and by the trust for the employees. We just lend the money.’ Iain McGlashan, the accountant, the man whose job was to make sure that the finances were sound and that nothing was done unless it promised a decent financial return, was looking incredulous now. ‘Why would you do that?’ Because we were owned by the trust set up by Philip Baxendale, I said. The purpose of the trust was to help strong companies become employee-owned. The whole point was to enable employees, led by professional managers, to buy the company where they worked. Obviously the fund had to make money to keep going, so the interest rate for this risk money would be higher than the bank’s, but the purpose of the fund was not to make money. It was to help them get hold of their company.
