British Aerospace Plc has denied categorically that it has any immediate plans to reduce its 21.1% stake in Orange Plc, the UK’s third biggest mobile phone network, following the relaxation of rules governing its involvement with the company. A spokesperson for British Aerospace said on Thursday that reports in London’s Evening Standard newspaper claiming that BAe would sell shares to bring its holding below the 20% level for accounting reasons were completely erroneous. Under normal rules, BAe’s current 21.1% holding in Orange would be accounted for as an associate, requiring BAe to acknowledge its share of Orange’s 200m pound net liabilities. But according to BAe, it has no direct managerial influence over Orange (having only non-executive representation on the board) and hence its share holding in Orange has only ever been included on its balance sheet as an investment asset. An eventual sale of some, or all of this investment cannot be ruled out, the company said, but at present, discussions on the matter had not even taken place. The opportunity for BAe, and its 49% stake holding partner in the investment, Hutchison Whampoa Ltd, to reduce their investment derives from what Orange called a routine relaxation of the legal covenants surrounding its debt facilities. Orange has just completed a 1.75bn pound refinancing deal in which it has replaced old debt for new, but at a more advantageous interest rate.
