07 Oct 07. Air tanker fleet is hit by credit crunch. The RAF may become an unwitting victim of the credit crunch, with the lending crisis threatening to increase the cost of a £13 billion scheme to provide a vital new fleet of tanker aircraft. The scheme’s backer, Airtanker, a consortium led by Airbus’s parent company, EADS, is trying to raise £2.5bn in the City for a fleet of new Airbus tanker aircraft supplied to the RAF by the private sector. But the cost of a fund-raising has ballooned because of the credit crunch, and the companies involved are said to be considering a bond issue instead, even though bond markets have been in limbo since July. Details of the financing were revealed last week by Thomson’s Project Finance International, a financial publication. It said the programme, called Future Strategic Tanker Aircraft (FSTA) “hangs in the balance”. Its report said that a plan for a group of banks to provide the loans came unstuck when they raised the price because of the credit crunch.
The government had expected the loans to cost 50 basis points (half of 1%) over
Bank rate, but the banks wanted a full 1%, with an option to increase the interest if market conditions changed. Project Finance International said the banks involved included RBS, Bank of Scotland, Société Générale, BBVA, Calyon and BNP Paribas. It is thought the FSTA team may now consider, at least in part, a bond issue to fund the project. It had earlier decided against using bond markets because of fears over the uncertainty of pricing. The EADS-led consortium includes VT, Rolls-Royce, Cobham and Thales, and plans to provide a fleet of Airbus A330 tankers to replace the RAF’s old tanker fleet. It was selected as preferred bidder in February 2005. (Source: The Times)
Comment: In a number of previous issues we have suggested that the Road Show to sell FSTA to the City had met with some problems which have now been compounded by the Credit Crunch. It may be that the Project progresses with funding which has to be ‘topped up’ or re-negotiated at a later date and possibly with another Government!
09 Oct 07. President Nicolas Sarkozy of France moved yesterday to limit damage to his reform programme from the mounting controversy over the government’s role in share dealings at EADS by pledging to punish any offenders. The president was forced to break his silence on the inquiry into share dealings at the aerospace group between November 2005 and April 2006 as criticism grew. “I will pursue the inquiry to the very end to know what the state’s responsibilities were . . . I want to know the truth,” he told factory workers in Mâcon. Mr Sarkozy was sharply criticised at the weekend for his failure to comment since it emerged last week that the government had been warned that EADS would go through a “period of turbulence” several months ahead of its profits warning in June 2006.
In spite of the advice, which Thierry Breton, the former finance minister, says was based on public information, the state-owned Caisse des Dépôts (CDC) finance house stepped in to buy EADS shares when Lagardère, the group’s French industrial shareholder, decided to sell half its 15 per cent stake in April.The acquisition came just weeks after Dominique de Villepin, then prime minister, urged the CDC to take a more active role in protecting French companies through equity stakes. The AMF stock market authority is investigating share dealing by Lagardère and Daimler, its German counterpart, as well as 21 past and present executives at EADS and Airbus, its aircraft making subsidiary. (Source: FT.com)
07 Oct 07. Privately-owned Australian defense and technology systems group Tenix could be sold in a A$1bn-plus ($900m) auction, the Australian Financial Review reported on Monday. Owners the Salteri family, one of Australia’s richest families, have appointed UBS to handle the sale, with a range of interested parties notified of the plans, the paper reported, without citing