Labour on attack over atomic sale

Opposition says privatisation of AEA Technology could pose a threat to national security
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Labour this weekend attacked the privatisation of AEA Technology, the former commercial arm of the UK Atomic Energy Authority, as being against the national interest because of its key role in the country's nuclear defence.

The firm publishes its path-finder flotation prospectus tomorrow, and the Government is hoping to raise at least pounds 200m from the sell-off, possibly the last before the general election.

Based at Harwell in Oxfordshire, AEA Technology's bread and butter is decommissioning work on nuclear power stations in the UK and abroad, including Chernobyl in Ukraine.

Among other activities, however, it inspects the UK's nuclear submarine fleet and has the final say whenever a Trident or a nuclear-powered hunter- killer vessel puts to sea.

On Monday, Trade and Industry Secretary Ian Lang will announce a special golden share, insulating the firm from takeover for a likely three years. After overseas bids for utility firms, however, Labour says this is far from enough to protect the company from unwelcome foreign attention. "This is something that concerns us greatly because it is an important operator in some very sensitive fields," said Margaret Beckett, Labour's shadow trade and industry secretary.

"We will want to look very hard at the prospectus to see how great are the risks that the Government is running with the national interest."

The Government has already spent around pounds 100m of taxpayers' money, much of it on redundancies, in grooming AEA Technology for sale. All the UKAEA's nuclear liabilities will also be left in the public sector, an issue that delayed the sell-off earlier this year.

As a unique animal, analysts say it will be tough to value, but good growth prospects may bring a value of pounds 200m to pounds 240m when the issue is priced on 25 September.

Unlike British Energy, there will be no share-shop offer to the public. Instead advisers Schro- ders and Cazenove for the Government and Lazards for the company have opted for an institutional placing and intermediaries offer through brokers, with a likely 80/20 or 75/25 per cent split between the two.

"We'll be looking if not for the Sids, then the professional investor," one adviser said.

AEA Technology was hived off from the UKAEA in April, 1994 but has been developing commercial activities for 30 years.

After cost-cutting, operating profits leapt to pounds 19.8m from pounds 7.4m in the year to end March. Over the last three years, it has shed 1,100 staff, leaving 3,500 at six UK sites and offices in the US, Europe, Japan and Korea.

Sales were flat at pounds 253.3m, but analysts believe thriving nuclear opportunities, plus progress on non-nuclear, private sector and international work will deliver future growth. "It's in a good position to push forward. AEA Tech- nology's core decommissioning business is going through a boom period," said analyst Derek Brown at broker Kleinwort Benson.

Last year, just under half of turnover came from non-nuclear work. With 21 operating groups in four divisions, the firm also tests and inspects oil and gas rigs, supplies radioactive medical isotopes, makes radiation- proof robotic TV systems and ultra-light lithium batteries.

In one contract with BT, AEA Technology is stripping down 6 million old trim-phones for radioactive tritium, which makes the telephones glow. On the de- fence front, its "Silver 2' process renders mustard gas harmless.

Tomorrow's prospectus will also reveal salaries and incentives for directors, led by chairman Sir Anthony Cleaver and chief executive Peter Watson.

Mr Watson has already cashed in once on privatisation: he made pounds 4m from the recent sale of the Porterbrook train leasing company, which he chaired, to bus operator Stagecoach.