Swan Hunter hangs in balance: French rescuer disillusioned by Ministry of Defence price cut for

THE FATE of Swan Hunter could be sealed this weekend as Soffia- CMN, the French group that has tried to rescue the Tyneside shipyard, decides whether to pursue the acquisition.

The defence procurement minister, Roger Freeman, has invited CMN's chief shareholder, Iskandar Safa, to meet him in London in the next few days.

CMN is believed to be disillusioned with the Ministry of Defence, which on Wednesday cut the price it was prepared to pay for work on the yard's remaining contract, HMS Richmond.

The MoD said it would drop the price by pounds 700,000 to pounds 57m. Talks on Thursday between the MoD, the French group and Price Waterhouse, Swan's receivers, failed to resolve the issue.

Mr Freeman said last night the MoD remained willing to negotiate 'in good faith' with the receivers and CMN to obtain a price that was fair and offered good value for money for the taxpayer.

'It is also necessary to demonstrate even-handedness of treatment with other contractors,' he said.

Yesterday Fred Henderson, chairman of CMN Support Services, the UK arm of the French company, said: 'It is not the sum of money. It is the whole spirit of the thing. Our major concern is that we feel we need to re-examine the attitude of the Government.' He hoped to make an announcement early next week.

There is a view in the industry and among some MPs that the Government has no commitment to keeping shipbuilding alive on Tyneside. It dealt a severe blow to Swan Hunter last month when it awarded the order to refit the landing ship Sir Bedivere to the Rosyth yard in Scotland.

Soffia-CMN fears that the yard, which will be bidding for Ministry of Defence contracts in future, will continue to lose out.

Stephen Byers, Labour MP for Wallsend, said: 'We face 48 hours where the future of shipbuilding on Tyneside hangs in the balance. There is a desperate need for a positive indication that the Government wants to see shipbuilding continue on the river Tyne.

'The prime responsibility lies with the Government.'

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