Private company raises claim against QinetiQ, flotation may face hurdle

Private company raises claim against QinetiQ, flotation may face hurdle

	Published : Tue, 07 Feb 2006 10:10 By : Richard Owen Print this Story

LONDON: U.K.'s defence technology group QinetiQ Plc., which is in the midst of a 1.3-billion-pound listing, is facing a 400-million-pound claim from British Titanium Plc. over alleged termination of a sub-licence for a titanium manufacturing process. QinetiQ has issued a supplementary prospectus Tuesday, outlining details of the claim and dismissing it as without merit.

British Titanium claims that the cancellation of the sub-licence had deprived it of potential future investment and profits and that it intends to initiate legal proceedings.

QinetiQ's board described the claims as unsubstantiated and without merit and that the quantum of the claim was "spurious, speculative and without basis". The company will defend vigorously any legal action British Titanium may take.

Interestingly, British Titanium's published audited accounts for the year ended March 2005 reveal that the company had no turnover and it had other operating income of just 166,760 pounds.

A QinetiQ spokesperson stressed that the company would go ahead with its flotation and the threatened legal action is not likely to affect the process or delay the listing. He said book building in the stock is due to finish Thursday and a firm price for the shares is expected to be published Friday.

QinetiQ expects to fix the price in the range of 165 to 205 pence for its shares. In the gray market, the shares are now trading around 210 to 217 pence. The U.K. government and the company are learnt to be considering a greenshoe option in order to release additional shares in the market.

British Titanium is a tiny spin-off set up by a group of former Cambridge metallurgists and entrepreneurs. The company claims QinetiQ had gone back on a deal to sub-license a revolutionary new technique for producing titanium, the expensive metal that has almost universal applications in science and technology.

This is the latest in a series of controversies surrounding the defence research firm, which the government wants to privatise. It is rumoured that U.S. private equity group Carlyle will make a windfall out of its initial investment in the company, while its executive chairman Sir John Chisholm will end up with a shareholding worth 24 million pounds after the flotation.