Nuclear Sub Protection Plan For Rolls-Royce
The financial woes at Rolls-Royce could result in the nationalisation of its nuclear submarine division, under contingency plans.
13:49, UK,Monday 14 December 2015
Plans to protect the UK’s interests if the company powering the country’s nuclear deterrent runs into deeper trouble have been reportedly drawn up by the Government.
Rolls-Royce’s nuclear submarine business – which maintains the nuclear reactor propulsion systems aboard the Navy’s four Trident-fitted submarines – could even be nationalised under the contingency plans, according to the Financial Times.
It said several options had been drawn up to cover various scenarios, including the possibility of a takeover bid for the group by a foreign firm.
While there are existing safeguards to ensure the Government must approve any such deal, investors would perhaps be forgiven for considering any interest, given the fact the Rolls-Royce share price has lost a third of its value this year alone.
The company has issued a string of profit warnings – its problems exacerbated by weaker defence spending and lower demand for its services in the oil and gas industry following the collapse in commodity prices.
The company outlined the initial phase of its turnaround strategy under new chief executive, Warren East, a fortnight ago.
It involved hundreds of senior managers losing their jobs and hundreds of millions of pounds being slashed from the company’s annual cost base.
Its biggest shareholder, the American activist fund, ValueAct, has attracted particular attention.
It is pressing Rolls to go further and sell off its marine engine division – a move Mr East has signalled he is reluctant to do.
ValueAct is also seeking a place on the board.
Sky News reported last week that Value Act’s stake in Rolls-Royce – which remains one of the Government’s most important suppliers and engineering contractors – was said to have attracted increasing attention from senior Whitehall officials.
Representatives of both firms were expected to meet in Derby this week.
A Rolls-Royce spokesperson said on Monday: “We are in contact with Government as a matter of routine and regularly keep them updated on our performance and progress.”
The defence procurement minister Philip Dunne told the FT last week the Government was “concerned” Rolls-Royce was able to maintain its nuclear obligations and would “take a view in the event there was corporate activity.”
A spokesman for the Prime Minister said today: “Rolls-Royce is a major contributor to our economy. It’s an important supplier to the government. We will continue to work closely with them. I’m not going to get into specifics about the company’s future.”