FED: ADI to be sold to French Australian joint venture

AAP General News (Australia)
08-17-1999
FED: ADI to be sold to French Australian joint venture

By Max Blenkin, Defence Correspondent

CANBERRA, Aug 17 AAP - Australia's leading defence industry company ADI is to be sold to a
a French-Australian joint venture with both companies undertaking to keep regional operations
and jobs intact.

Finance Minister John Fahey and Defence Minister John Moore said Australian construction
company Transfield Holdings and French defence and aerospace firm Thomson-CSF had been
selected as preferred buyers for ADI, formerly Australian Defence Industries.

No sale price has been revealed, although a defence source suggested it may be greater than
the $225 million cited in media reports last week.

Further details will be announced once the sale agreement is finalised.

From a field of five consortia, the protracted ADI privatisation turned into a two-horse
race with Australian shipbuilder Tenix, which parted from Transfield in 1996, placed second.

Mr Fahey and Mr Moore said the deal would build on the strengths of ADI.

"The joint venture has indicated its commitment to the continued operation of ADI's
existing businesses at their current locations," they said in a statement.

"In particular, it is expected that ADI's operations at Bendigo, Lithgow, Newcastle and
Albury will continue and, where commercially possible, be strengthened by the development of
new business activities, presenting opportunities for regional employment."

ADI was founded in 1989 to run the government's unprofitable shipyards and arms factories
with a view to eventual privatisation. It remains Australia's largest defence business with
3,100 employees and 1998 turnover of $543 million.

Thomson-CSF was founded in 1892 and now ranks sixth for worldwide defence business with
particular expertise in electronics. It was nationalised in 1982 but the French government is
now disposing of its interest in a privatisation deal with Alcatel, Aerospatiale and Dassault.

Thomson's involvement in Australia dates back to the 1960s and it and subsidiaries employ
700 people. The company has a growing involvement with US company Raytheon, ranked number five
for worldwide defence business.

Transfield, founded in 1955, is a wholly Australian-owned engineering and private
infrastructure company with interests throughout the region, 7,000 employees and expected
turnover of $1.6 billion for 1999-2000.

Transfield managing director Guido Belgiorno-Nettis and Thomson chairman Denis Ranque said
ADI was a major strategic investment which fitted with existing capabilities and experience.

"Our bid combines Australian ownership and expertise with international technology. We plan
to develop it into the foremost defence systems and high technology company in the region,"
they said in a statement.

ADI managing director Ken Harris said ADI had been long-awaiting today's announcement and
the company would be greatly advantaged by having Transfield and Thomson as new owners.

"ADI has been adamant that in order for us to grow in this global competitive
technology-driven market, we need owners who are switched on to doing business in that market.
This is why government are not suitable owners of businesses," he said in a statement.

However, opposition defence spokesman Stephen Martin said this "rushed fire sale" would
probably not realise the true value of ADI.

"More importantly I am calling on the minister for defence John Moore to assure the
Australian public that the sale of ADI to a company that is 50 per cent foreign-owned will in
no way compromise Australia's access to defence technology, particularly from the United
States," he told AAP.

AAP mb/jnb/br

KEYWORD: ADI NIGHTLEAD

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