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Electronics Production | November 16, 2007

Importand defence contract delayed by debt squeeze

The Ministry of Defence’s heavily-delayed £13bn aircraft refuelling contract, the biggest private finance initiative project, faces further delays due to the credit crunch.
According to the English business press "the Business" AirTanker, the consortium that is the preferred bidder, hoped to complete the deal’s £2bn funding competition this month, which would have allowed the contract to be signed before Christmas. AirTanker comprises EADS, Cobham, VT Group, Rolls-Royce and Thales but the consortium will now not formally select its banks until the new year, in the hope their terms will improve as confidence returns to the debt market.

"It will be a better time in the new year. Hopefully pricing in the financial markets will be a little better then, as they will be in an improved position”, Chris Cundy, finance and commercial director at VT, told the Business.

Funding must be in place before the contract can be signed as it will be used to pay for the project’s first phase, the purchase of 14 aircraft according to the Business.

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