VT Chairman outlines shipbuilding venture with BAE Systems
Chairman gives details of how new joint venture will be set up

In a statement provided with the company's Preliminary Results for year ending 31st March 2007, VT Group's chairman Michael Jeffries gave an indication of how the new shipbuilding venture between his company and BAE Systems would be structured.

He said "We announced in December 2006 that we had entered into discussions with BAE Systems to combine our respective surface shipbuilding and naval support businesses, including Fleet Support Limited (FSL). The proposed consolidation is in line with the Defence Industrial Strategy and would create a world-class provider and strategic partner for the UK Government.

"It is envisaged that the JV would be owned 45% by VT and 55% by BAE Systems, with equal board representation and voting rights."

However he signalled that VT Group may pull out of shipbuilding altogether after three years:

"In addition it is envisaged that VT will benefit from certain specific rights governing its potential exit after year 3 with a minimum guaranteed floor price. The transaction as a whole remains subject to final agreement between the parties and the MoD and to VT shareholder approval. Further details will be provided in due course. The JV would be expected to achieve turnover in excess of £700m per annum and would employ approximately 6,850 people. "

He also said that as part of any transaction, it is also likely that VT would acquire BAE Systems’ 50% shareholding in Flagship Training Ltd (Flagship) which would enhance VT's training capability across all sectors.

"The planned JV would give improved stability and visibility of workload in the Naval sector and allow greater management focus on our developing support services businesses. Much progress has been made on this consolidation but the transaction can only be concluded following the full go-ahead of the Aircraft Carrier (CVF) project."

He also confirmed VT Group's withdrawal from small commercial boatbuilding activities. Earlier the group announced that VT Halmatic would be restructured and would concentrate on the build of small military vessels.

VT Shipbuilding saw profits higher than last year with a turnover of £164.0m making £13.2 million in profits. However this figure excluded costs for the restructuring of Halmatic.