6th Sep 2006 17:48
BAE SYSTEMS PLC06 September 2006 BAE SYSTEMS PLC 6 September 2006 Not for release, publication or distribution in or into the United States, Canada, Australia, Japan or the Republic of Ireland. BOARD OF BAE SYSTEMS PLC TO RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOUR OF PROPOSED DISPOSAL OF ITS AIRBUS SHAREHOLDING On 2 July 2006, BAE Systems plc ("BAE Systems" or the "Company") announced thatthe price (the "Price") payable by European Aeronautic Defence and Space CompanyEADS N.V. ("EADS") in relation to the proposed disposal of BAE Systems' entireinterest in Airbus S.A.S. ("Airbus") (the "Proposed Disposal") had beendetermined by an independent expert to be €2,750 million (£1,903 million (1)). On 5 July 2006, the Company announced its intention, in accordance with Clause10.6 of the Shareholders' Agreement between BAE Systems, EADS and Airbus, toundertake an audit of the Airbus Group (the "Audit"). Today the Board of BAE Systems (the "Board") announces that it considers thatthe Proposed Disposal is in the best interests of the Company and itsshareholders as a whole. Having assessed the results of the Audit, the Board believes that Airbus isfacing a challenging short to medium-term outlook, in particular with respect tocertain of its principal programmes. The Board believes that a significantamount of management focus, time and investment will be required to address theissues currently facing Airbus to improve its operating and financialperformance and thereby to increase its value. Inevitably, there are risksinvolved in such a recovery programme and, having reviewed the Audit, the Boardis concerned about the possible cash requirements of the Airbus business in themedium-term. The Board therefore believes that it is in the best interests of the Company toexit at the Price determined by the independent expert. In arriving at thisjudgement, it weighed with the Board that if it does not proceed with theProposed Disposal, it may be necessary to retain BAE Systems' interest in Airbusfor an extended period to be confident that it could be sold for materially morethan the Price. Following repayment of debts outstanding between BAE Systems and Airbus atcompletion and the payment of transaction related costs, net proceeds to BAESystems are estimated to be approximately €1,784 million (£1,212 million (2)).The Board proposes to return up to £500 million to BAE Systems' shareholders byway of on-market purchases of shares following completion of the ProposedDisposal. The Board also intends to consult with the trustees of the Company'spension schemes and the Pensions Regulator with regard to any further investmentin those schemes. The remaining proceeds, together with BAE Systems' other cashresources, will be available for debt repayments and future investment in theCompany and to pursue selected acquisitions in the core defence business. Due to its size, the Proposed Disposal requires the approval of BAE Systems'shareholders at an extraordinary general meeting. Further details regardingthe Proposed Disposal, including the time and location of the extraordinarygeneral meeting, will be set out in a circular to be sent to shareholdersshortly. Enquiries: BAE Systems Andy Wrathall (Investor relations) Tel: +44 1252 383 820 John Neilson (Media relations) Tel: +44 1252 384 795 --------------------------------- Notes: (1) On the basis of the exchange rate on 2 July 2006 of €1.445 = £1.000 (2) On the basis of the current exchange rate of €1.4720 = £1.000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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