Cash-in ahead at VSEL: Cambridge don stands to gain nearly pounds 1m from bid for shipyard

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The Independent Online
AN ENGINEERING professor at Cambridge is set to be the biggest individual winner from any sale of VSEL, the shipbuilder that announced it had received a takeover approach last week.

Shon Ffowcs Williams, Rank Professor of Engineering (Acoustics) and fellow of Emmanuel College, is a non-executive director of VSEL who, according to the accounts for the year ending in March, owns 79,039 shares. At Friday's closing price of pounds 12.10, his holding is worth pounds 956,000.

Prof Ffowcs Williams was co-founder of Topexpress, a Cambridge-based engineering consultancy that specialised in 'anti-noise' - the generation of pressure waves to cancel noise. It was bought by VSEL in 1987 for 730,000 shares, of which the professor received 252,000. He became a non-executive director of VSEL in October that year.

The professor, who lists his hobbies in Who's Who as friends and cigars, sold 100,000 shares during 1992/3, raising about pounds 400,000.

VSEL's shares jumped by 252p on Thursday after the company confirmed an approach by a friendly bidder. The City believes it is British Aerospace, though neither company will confirm this.

A bid will have to be approved by the Ministry of Defence, which still holds a golden share. It can block any individual holding in VSEL of more than 15 per cent. However, shipbuilding experts say the Government would be unlikely to discourage a link with BAe, because a merged company - probably working closely with the Norwegian-owned Kvaerner Govan - would help counterbalance the increasing domination of GEC in the defence world.

The City believes a BAe takeover would be purely financially motivated, as it would give BAe access to VSEL's cash pile, but industry sources say it could have commercial logic. Previously, the MoD bought naval systems, such as BAe's Sea Wolf missile launchers, directly from the supplier, and then told the shipyard to install them. Under the new 'whole ship procurement' approach, the yard is the prime contractor and suppliers are pushed into a secondary role. BAe always attempts to have a leading role, and the only way it can regain that is to buy a shipyard.

When VSEL was privatised in 1986, 11,500 workers became shareholders. Most of them sold out after a couple of years, having tripled their money, but there is still likely to be a healthy injection of cash into the Barrow-in-Furness economy if the shipyard is sold. Just under 1,000 workers still hold shares, and 739,000 employee share options were issued in 1992. These are exercisable at pounds 4.07 in 1998; but a takeover is likely to trigger early payment, generating at least pounds 6m.

The likelihood of a bid for VSEL has cast uncertainty over the future of the Devonport Dockyard, which repairs nuclear submarines. It is currently state-owned, but is managed by a consortium of Brown & Root, Weir Group and BICC. The Government has announced it is to be sold, and preliminary bids must be in by the end of this month. Both the existing consortium and VSEL have said they intend to make an offer, but VSEL is unable to make any move while a bid hangs over it.

The industry and City are now watching to see what moves, if any, will be made by GEC. It owns the Yarrow shipyard and was ready to buy Swan Hunter last year, when Swan lost an important order to VSEL and went into receivership. The industry a bid for VSEL from GEC and is waiting to see if he will allow BAe to go ahead unchallenged.

(Photographs omitted)