Babcock floats move for Titanic shipyard as owner teeters on brink
Babcock International, the London-listed defence contractor, is weighing a possible bid for some of the assets of Harland and Wolff, the shipbuilder which is close to collapse.
Sky News has learnt that Babcock, which has a market value of £2.4bn, has expressed an interest in Harland and Wolff’s Belfast shipyard which is famous for having built The Titanic.
News of its interest comes amid reports that Harland and Wolff could fall into administration as soon as next week.
The company has been struggling under the weight of a substantial debt-pile, and was dealt a hammer blow soon after the general election when the government decided against guaranteeing a £200m loan to it.
It was unclear this weekend how serious or advanced Babcock’s interest was in Harland and Wolff’s Belfast shipyard or its other assets.
Several other trade and financial bidders are understood to have signalled their interest in bidding, according to defence industry sources.
Bankers at Rothschild, who are running a sale process to gauge interest in the company and its assets, have set a deadline for proposals of later this month.
Navantia, the Spanish shipbuilder which has a joint contract with Harland and Wolff, is likely to be among the rival bidders.
Teneo is reported to have been put on standby to act as administrators.
Pic: PA
Founded 163 years ago, Harland and Wolff operates from three sites other than Belfast: one at Appledore in south-west England, which used to be owned by Babcock; and two in Scotland.
In recent weeks it has been engulfed by management turmoil, with the departure of its chief executive and, this week, its finance chief.
On Friday, Russell Downs, the company’s interim executive chairman, said he had ordered a probe into what he described as an apparent “misapplication” of more than £25m of corporate funds.
Its shares, which are listed on London’s junior AIM stock market, have been suspended for months, and will be delisted if the holding company collapses into insolvency proceedings.
The parent company’s administration will not mean that its operating facilities are insolvent, as they are held in separate corporate entities.
However, there are concerns that such a move would prompt the Ministry of Defence to re-tender a contract that Harland and Wolff has a share in to build three Fleet Solid Support ships for the Royal Navy.
A worker at Harland and Wolff MIG welds an anode onto the rudder. Pic: PA
John Wood, the former chief executive who was forced to step down recently, told The Sunday Times that he was preparing a rescue bid for Harland and Wolff.
He indicated to the newspaper that he could seek an injunction to prevent its holding company being placed into administration.
Babcock has been deeply embedded in Royal Navy shipbuilding contracts for decades, and would be a logical acquirer of Harland and Wolff assets.
Workers at the Harland and Wolff shipyard. Pic: PA
The FTSE-250 group has largely recovered from its own travails of several years ago, announcing last November that it would pay its first dividend for four years.
Shares in Babcock have risen by over 20% during the last year.
Babcock said that it did not comment on speculation.
Nick Read is to end his torrid tenure as chief executive of the Post Office as he prepares to give evidence to the inquiry into the Horizon IT scandal.
Sky News has learnt that Mr Read, who took over five years ago, has decided to resign from the government-owned company.
He initially stepped back temporarily from the post to focus on his evidence to the inquiry into the IT debacle that affected hundreds of sub-postmasters.
In a statement confirming his departure after Sky News reported that it was imminent, Mr Read said: “It has been a great privilege to work with colleagues and Postmasters during the past five years in what has been an extraordinarily challenging time for the business and for Postmasters.
“There remains much to be done for this great UK institution but the journey to reset the relationship with Postmasters is well underway and our work to support justice and redress for Postmasters will continue.”
Mr Read had been criticised for his leadership of the Post Office for some time, having been accused of being fixated with his pay package by its former chairman, Henry Staunton.
Mr Staunton was sacked earlier this year by the then business secretary, Kemi Badenoch.
Nigel Railton, a former Camelot executive, was installed as Mr Staunton’s successor.
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Under his leadership, Mr Read had raised the idea of handing partial ownership to Post Office workers, although little progress has been made on such a scheme because of the company’s financial travails.
Mr Read will leave the Post Office next March, and his duties will be assumed while he focuses on the Horizon inquiry by Neil Brocklehurst, the company’s interim chief operating officer.
The outgoing chief executive will be paid during his notice period but will not receive any additional payoff, according to a government source.
A spokesperson for the Department for Business and Trade declined to comment.
Business
No change in CPI inflation ahead of interest rate decision – but another measure ticks unexpectedly up
There’s been no change in the rate of price rises, official inflation figures showed.
The rate of inflation stood at 2.2% in August, the Office for National Statistics said, the same as a month earlier.
The announcement comes the day before interest rate setters at the Bank of England decide on the cost of borrowing, controlled through the interest rate.
Markets are expecting only a 26% chance of an interest rate cut.
Rises behind the headline figure
But another measure of inflation ticked unexpectedly up. Core inflation rose to 3.6%, even higher than economists had forecast.
Bank officials closely watch core inflation as it gives a reading on price rises without elements like food and energy, which are prone to rise and fall quickly.
A rise in core inflation to 3.5% had been anticipated.
An increase was also seen in services inflation, which rose from 5.2% in July to 5.6% in August. This measure encompasses the culture and hospitality sectors.
Why?
The main item acting to bring up inflation was airfares to European destinations, which showed a large rise during the months, following a fall a year ago, the ONS said.
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Lower restaurant and hotel costs, and a cheaper price for refilling a tank of petrol or diesel, was a balance against the air far rise, as was slightly cheaper shop-bought alcohol.
Cheaper oil prices also meant the cost of raw materials was down, which meant the cost of goods leaving factories slowed.
Keep up with all the latest news from the UK and around the world by following Sky News
Responding to the figures chief secretary to the Treasury, Darren Jones, said: “Years of sky-high inflation have taken their toll, and prices are still much higher than four years ago.
“So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.”
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