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Marine Log

August 16, 2006

Australian Government to sell ASC

Australia's Minister for Finance and Administration, Senator Nick Minchin, today announced the Government's decision to return ASC Pty Ltd (the former Australian Submarine Corporation) to private ownership.

ASC was established in 1985 and was subsequently chosen in 1987 as the prime contractor for the design, manufacture and delivery of the Royal Australian Navy’s fleet of six Collins Class submarines. ASC has shifted its focus in recent years to provision of design and maintenance services for the Collins Class, and shipbuilder for the RAN's future naval combatant projects.

Today's sale announcement follows consideration of a recent scoping study into the sale of ASC, which examined the optimal timing and method of sale.

It is the Government's current intention that the company be sold through a competitive tender trade sale, to commence in late 2007 and conclude in the second half of 2008. The precise timing and intended method of sale will be re-confirmed closer to that time.

"It is vital that ASC continue to have access to essential technical assistance from international partners and governments. A trade sale will allow the Government to ensure that the company's new owners are acceptable to overseas technology suppliers. A trade sale will also allow the Government to assess the financial strength and industrial experience that potential buyers would bring to the company," Senator Minchin said.

"The Government flagged in 2004 that ASC would not be sold until the AWD and amphibious ship contracts had been decided. The selection of the prime shipbuilder for the amphibious ships and the second pass approval for the AWD project are expected by mid-2007. Starting the sale process in late 2007 will also allow ASC and the Defence Department to finalize a range of sale preparations."

The Government's objectives for the sale of ASC are:

1. to preserve and enhance the long term viability of ASC, both financially and operationally, including ASC's ability to perform its role in relation to the Collins Class Submarine Through Life Support Contract and the Air Warfare Destroyer Project;

2. to enable ASC to contribute to an efficient and competitive Naval Shipbuilding and Repair Sector which is capable of delivering the best defense technology available to meet Australia's national security needs;

3. to ensure the fair and equitable treatment of ASC's employees;

4. to minimize ongoing risk and liabilities to the Commonwealth following privatization; and

5. subject to the above, to maximize sale proceeds, and to achieve a value for money outcome for the Commonwealth on a whole-of-Government basis.

"Any new owner of ASC will need to demonstrate its ability to comply with these sale objectives", Senator Minchin said.

The Government is proposing a foreign ownership limit of 49 percent. A number of other protections will be put in place to protect Australia's security interests. The Chairman, Chief Executive Officer and a majority of directors will have to be Australian citizens and ASC's head office, substantial operations and place of incorporation will have to remain in Australia. These details will be confirmed closer to the time of sale.

"My home state of South Australia is the home of ASC and the Government will ensure that the interests of workers are protected during the sale process," Senator Minchin said.

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