Warship combo

VT Group has signed a framework agreement with BAE Systems to establish a joint venture that will supply naval ships and provide them with through-life support.

The joint venture will comprise of VT’s and BAE Systems’ ship building operations, which includes Surface Fleet Solutions and Fleet Support Limited. VT will pay up to £75m for 50 per cent shareholdings in BAE Systems’ Flagship Training, which provides training and support services.

The companies have also signed a non-binding Heads of Terms for a Terms of Business Agreement (ToBA) with the Ministry of Defence for the surface warship sector, which sets out a 15-year partnering arrangement for developments in the surface warship sector.

VT’s facilities at Portsmouth and BAE Systems’ facilities at Glasgow will be put under joint management control with no site closures planned.

Although VT and BAE Systems will have equal board representation and voting rights in the JV, the underlying economic interest of VT in the JV will be 45 per cent, while that of BAE Systems will be 55 per cent.

The transactions, expected to be completed by the end of 2007, are subject to VT shareholder approval, regulatory clearances and the signing of a legally binding interim ToBA with the MoD.