BVT Surface Fleet agreed

The VT Group has signed an agreement with BAE Systems to form BVT Surface Fleet, a shipbuilding and naval support joint venture company.

The agreement includes VT’s acquisition of BAE Systems’ 50 per cent share of Flagship Training.

The terms of the transactions are substantially unchanged from those set out in the announcement by VT on July 25, 2007. As a result BVT will be owned 45 per cent by VT and 55 per cent by BAE Systems, with both companies having equal board representation and voting rights.

BVT’s dividend policy will be to distribute all of its earnings, with VT receiving priority receipt of its dividends until March 2010. BAE Systems has agreed to provide all further funding requirements up to an agreed limit.

On completion of the formation of BVT, VT will acquire from BAE Systems the remaining 50 per cent of Flagship Training for £65m and any interest will be payable in three years.

The contract for the aircraft carrier (CVF) programme and a 15 year partnering arrangement will be signed by the MoD and BVT, with the aim of defining future design, build and through-life support programmes.

BVT will operate facilities in Bristol, Glasgow and Portsmouth. Sir John Parker has been appointed as the non-executive chairman and Alan Johnston is chief executive.

VT Group chief executive Paul Lester said: ‘Placing our shipbuilding and naval support businesses in a large JV is a major strategic move that will allow us to focus more time on growing our engineering-based support services businesses.’

‘Securing full ownership of Flagship Training is another important step in this process as we become a major support services organisation.’