Posted on 10/04/2006 6:49:24 AM PDT by Righty_McRight
LONDON (AFP) - BAE Systems has announced that shareholders have backed the proposed sale of its 20-percent holding in troubled European aircraft maker Airbus to Paris-based peer EADS.
The sale, totalling about 2.75 bilion euros (3.5 billion dollars), was announced Wednesday and is expected to complete no later than October 14.
The disposal will hand Franco-German EADS outright ownership of Airbus, whose flagship A380 superjumbo was hit Tuesday by fresh delays.
"At an extraordinary general meeting held earlier today, the shareholders of BAE Systems passed a resolution approving the disposal of BAE Systems' entire interest in Airbus," BAE said in an official statement.
"As a result, BAE Systems expects completion of the disposal to take place not later than 14 October 2006, in accordance with the Shareholders' Agreement between BAE Systems, EADS and Airbus."
BAE Systems said that its shareholders had voted 99.85 percent in favour of offloading the stake to EADS, or the European Aeronautic Defence and Space company, which already owns 80 percent of Airbus.
In reaction, BAE's share price sank 1.06 percent to 395 pence, while the British capital's FTSE 100 index gained 0.41 percent to 5,961.40 points.
The BAE vote comes amid a torrid week for the crisis-hit Airbus project.
Following a board meeting late Tuesday, EADS announced a third-round of A380 delivery delays, a doubling of expected losses, a total cash-flow reduction of 6.3 billion euros (8.0 billion dollars), and a drastic plan to cut costs.
Shares in EADS tumbled 6.0 percent to 21.29 euros in Paris on Wednesday.
Deliveries of the A380 -- the world's bigggest passenger jet -- are now two years behind schedule.
Dick Olver, chairman of BAE Systems, told BAE shareholders on Wednesday that the company had decided the Airbus stake was not "core" to its strategy.
Olver also said that BAE believed Airbus was facing a challenging short and medium-term outlook -- particularly with regard to some of its main civil aircraft programmes.
He added that the BAE board had also been concerned about the potential cash requirements of the Airbus business in the medium term.
Some shareholders at the meeting expressed concern about the timing of the sale, arguing that it should have been done earlier.
"If you had gone ahead much quicker with this sale, we would have probably got a lot more money," one anonymous shareholder at the meeting said.
However, Olver said that EADS had proceeded with sale of the stake as early as possible after deciding it was in the company's interests.
"The execution of this has been done incredibly fast," he said.
Last month, BAE Systems had advised its shareholders to sell the group's stake to EADS for 2.75 billion euros.
The figure matched an independent assessment of the stake's worth made in July by investment bank Rothschild, but was far less than BAE's own estimate.
By the time they shed their stake, it will be worth 20 cents.
Getting out before bankruptcy is declared?
Man the lifeboats.
Following a board meeting late Tuesday, EADS announced a third-round of A380 delivery delays, a doubling of expected losses, a total cash-flow reduction of 6.3 billion euros (8.0 billion dollars), and a drastic plan to cut costs.
Deliveries of the A380 -- the world's biggest passenger jet -- are now two years behind schedule.
Olver also said that BAE believed Airbus was facing a challenging short and medium-term outlook -- particularly with regard to some of its main civil aircraft programmes.
He added that the BAE board had also been concerned about the potential cash requirements of the Airbus business in the medium term.
Sounds like the French Government and the German Government are going to have to subsidize Airbus for the next decade or so. I wonder how that is going to look when Boeing challenges things in the international trade WTO-GATT forum?
That .15% percent against must have been Chirac himself.
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