BAe fuels VSEL hopes in cash call for VSEL hopes deckys

British Aerospace has underlined its confidence it will win the battle with GEC for VSEL by reviving the second part of a rights issue to fund the takeover.

Less than two weeks before the Monopolies and Mergers Commission is expected to rule on the competing bids, BAe yesterday unveiled a £383m cash call and issue of warrants.

Last year BAe raised £178m as part of a two-stage £535m rights issue. The second stage was cancelled when the bids for the Trident submarine maker were referred to the MMC and the offers lapsed.

Dick Evans, BAe's chief executive, said: ``Without pre-empting the outcome of the MMC investigation, we have decided to pre-finance the cash element of any offer that we may make for VSEL."

But one analyst said: "The market will inevitably start thinking they know something about the MMC outcome that we don't. The shares held up well, but then BAe has had a lot of support lately.''

The MMC is expected to report its conclusions to Michael Heseltine, President of the Board of Trade, by 12 April. Both companies were expected to be cleared to renew their bids, and the outcome will stamp its mark on the future of UK defence procurement policy.

The rights will not go through if BAe's bid is blocked. "In that sense this is more a facility than a rights issue,'' a spokesman said. He said BAe acted now because a GEC bid is likely to be all-cash "and we did not want to be in the position of having to mount a fund-raising exercise after 12 April''.

A renewed BAe bid for VSEL will be via a share offer, with a cash alternative, the company said. The rights issue announced yesterday will be in two parts, the first raising about £94m. This will be repaid if, as part of a renewed bid, the cash element is higher than the £170m already raised. A second instalment will be called if the cash element exceeds £264m.

The issue will be equivalent to a one-for-five rights issue at 430p to raise up to £383m, and a one-for-25 issue of warrants. Each warrant will carry the right to subscribe for one new BAe ordinary share at 550p a share on 15 November 1996 and on 15 May and 15 November in each of the years 1997 to 2000.

Paul Bickford, of Panmure Gordon, said: "It seems like a sensible issue. BAe will be well positioned if they're allowed to bid for VSEL.'' However, Zafar Khan, at SG Strauss Turnbull, questioned last year's decision to cancel the second instalment. ``That was not clever because of the extra costs of reviving the issue now," he said.

VSEL, at Barrow-in-Furness, recommended BAe's offer before GEC entered the fray with a £14 a share cash bid. BAe's revised bid was worth £15 a share, but because of VSEL pivotal role in the defence industry the matter went to the MMC.

Comment, page 41

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk