Swan Hunter sale expected by June: French specialist naval builder set to buy shipyard if pounds 30m refit order is won

SWAN HUNTER, the Tyneside shipyard that went into receivership a year ago today, should be conditionally sold by the end of the month, one of its receivers said. Gordon Horsfield of Price Waterhouse said he expected to sign a contract with Constructions Mecanique de Normandie (CMN), but that it would be triggered only if Swan won a pounds 30m order to refit a landing ship, the Sir Bedivere, for the Royal Navy. The result of the bidding will not be known until mid-July.

Mr Horsfield announced at the end of March that a deal with CMN was only weeks away, but said yesterday that he had underestimated the time negotiations between the French company and the Ministry of Defence would take. The MoD has to agree to allow it to take over the construction of a Type 23 frigate, which should be completed in November. But he said the French were now close to an agreement with the ministry. The final details should be settled next Friday, allowing signature by the end of May.

Five companies are bidding for the Sir Bedivere work, but Swan's managers believe they are well placed to win because their cost base is now so low. The workforce has been reduced from 2,500 to 1,000, and is about to fall by another 100. All the essential functions of the yard remain intact.

Mr Horsfield said he believed Swan Hunter would close in November if the bid was not successful. But managers are optimistic that if the CMN takeover goes ahead, low costs should allow the yard to win a number of new orders. CMN, which has been highly successful at winning export orders for specialist ships, intends to use Wallsend to build vessels larger than its Cherbourg yard can handle. An EC ruling last year that it would be eligible for a 9 per cent subsidy on merchant ships means it should also have a better chance of winning non-military work.

GEC, VSEL, Vosper Thornycroft and the German company Bremer Vulkan had all looked at Swan Hunter and backed away, Mr Horsfield said. Overcapacity in the naval building industry had limited Swan's appeal to a general warship builder, and only a specialist such as CMN could keep the yard working.

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