Sale of Stock Boat and Customisation Contract Award

Austal Limited (Austal) (ASX:ASB) is pleased to announce it has completed the sale of “Austal Hull 270”, the Company’s 102 metre trimaran stock vessel, for $61.5 million, further enhancing Austal’s capital flexibility.

Austal previously announced on 6 January 2014 that it had negotiated an option to purchase contract with the Channel Islands’ ferry operator, Condor Ferries, which has now been exercised.

Under the terms of the sale contract settlement and payment is effective immediately.

The post-tax proceeds from the sale of the vessel will be used to pay down infrastructure-related debt, providing Austal with even greater capital flexibility as the Company delivers on its significant $2.8 billion order book and pursues additional opportunities, such as variant-style defence vessels, extending existing vessel programs, and options for commercial vessels.

Condor Ferries has been operating since 1964 and carries more than 1 million guests and 200,000 guest vehicles between France, the UK and the Channel Islands each year.

Austal Hull 270 will remain at Austal’s commercial shipyard in the Philippines for customer modifications. The modifications will commence immediately and are valued at approximately $6 million, to be paid by Condor progressively as works are completed.

Austal Chief Executive Officer Andrew Bellamy said the significant capabilities provided at Austal’s Philippines shipyard had been crucial in securing the additional customisation contract.

The vessel is expected to be delivered for final fit-out to Condor’s operations in the UK in the first quarter of CY15 and commence operations in the English Channel by the second quarter of CY15, after a handover period.

Condor Chief Executive Officer James Fulford said: “It is fantastic to be adding this prestigious ship to our fleet. The 102 will offer increased reliability, capacity and comfort for our guests and we are very much looking forward to her arrival in our islands in the Spring.”

Mr Bellamy said: “It is very pleasing that we have been able to complete the sale of this asset.”

“The sale of the stock boat further strengthens Austal’s balance sheet by liberating cash that will be used to reduce infrastructure-related debt. It provides significant additional capital flexibility for the Company as we focus on winning new work and delivering on our significant order book.”