[A-List] UK state: EU military ties

["Michael Keaney" <michael.keaney@xxxxxx>]

Here's another development which is a manifestation of a process long in
gestation, temporarily derailed by Bush, 9/11, etc., and now apparently
accelerating again, no doubt precisely because of Bush, 9/11, etc. Meanwhile
EADS, in line with the political arm of the EU ruling class (i.e., national
governments and European Commission) is also tying up deals in China, no
doubt much to the consternation of the US.

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EADS set to finalise UK military satellite deal
By Kevin Done in London
Financial Times; Oct 23, 2003

European Aeronautic Defence and Space company is close to finalising an
agreement with the UK government and a 30-strong banking consortium for the
provision of military satellite communications services in the biggest
private finance initiative contract with the UK Ministry of Defence.

The Skynet 5 deal is expected to be signed shortly, possibly as soon as
tomorrow, and will include a £963m ($1.6bn) loan facility from a banking
consortium led by BNP Paribas, Canadian Imperial Bank of Commerce and HSBC,
the mandated lead arrangers and joint book runners.

The 15-year contract is expected to be worth up to £2.5bn in total revenues
and marks an important breakthrough for EADS in the UK defence market, in
particular for the provision of services as well as hardware.

The contract will be signed with Paradigm Secure Communications, a
wholly-owned subsidiary of EADS, which was originally selected as preferred
bidder in spring last year following competition with a consortium led by
Lockheed Martin, the US defence group.

Separate contracts are being signed with EADS' Paradigm Services for the
full service delivery and with EADS Astrium, the satellite making subsidiary
of the Franco-German group's space division, for the provision of satellites
and ground systems.

EADS is expected to provide at least two satellites for Skynet 5, for launch
possibly in 2006 and 2007.

As part of the deal EADS will provide services by taking over the existing
Skynet 4 network from the MoD, which will be supplemented later with the
addition of the new generation satellites.

Total financing for the project is expected to be around £1.2bn with £250m
of equity to be provided by EADS in addition to the £963m loan facility.

EADS is hoping to use the Skynet 5 contract as a springboard for winning
military services contracts in other countries and for offering satellite
services to Nato.

The space division has been hit hard by the collapse in commercial
telecommunications satellite orders and by problems and delays in developing
a new generation of satellites.

Separately, EADS is part of the AirTanker consortium that is battling to win
the MoD's largest private finance initiative deal, the £13bn contract to
replace the RAF's inflight refuelling tankers. It is bidding against the
TTSC consortium led by Boeing and BAE Systems.

The signing of the Skynet 5 contract comes at an important time for EADS,
which is in the midst of a restructuring of its space division.