BAe nearer Taiwan deal

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The Independent Online
THE FINAL hurdle to British Aerospace's pounds 250m joint venture with the Taiwan Aerospace Corporation appears to have been overcome.

According to a report in a leading Taiwanese newspaper yesterday, the Taipei government has instructed a banking consortium to lend TAC dollars 400m to help finance the deal.

The economics minister, Chiang Pin-kung, will ask the consortium, led by the state-owned Chiao Tung Bank, to approve the loan officially on Monday, the United Daily said.

BAe's shares lost 12p on Wednesday on fears that the link-up would miss its deadline of the end of the month. This has already been extended twice and John Cahill, the chairman, said he doubted if the company's board would extend it again. Analysts saw this as an attempt to put pressure on Taiwanese banks that had fought shy of providing the money, which will be used to provide leasing finance and working capital for a new company, Avro International Aerospace Co.

BAe plans to transfer production of its regional jet airliners to the new company in order to be close to the fastest-growing markets and to take advantage of Taiwan's lower costs.

The banking consortium has questioned the market outlook for the regional jet as well as the risks involved in the leasing operation.