• Austal to establish Austal Defence Australia as the Commonwealth's strategic shipbuilder for Tier 2 surface combatants
• Austal to deliver the LAND8710 Landing Craft Medium and Landing Craft Heavy programs
• Commonwealth to have veto rights and a 'Sovereign Share' in Austal Defence Australia to protect national security interests

Austal Ltd has finalised its Strategic Shipbuilding Agreement (SSA) with the Commonwealth of Australia, which will appoint a newly created Special Purpose Vehicle and Austal subsidiary, Austal Defence Shipbuilding Australia ('Austal Defence Australia'), as the Commonwealth's strategic shipbuilder for Tier 2 surface combatants at Henderson, Western Australia. The Commonwealth Government has now approved the terms of the SSA, and the formal agreement and related contract documentation are currently being prepared. Under the SSA, Austal Defence Australia will become the prime contractor for the build and delivery of the LAND8710 - Landing Craft Medium (expected to be 18 vessels) and Landing Craft - Heavy (expected to be 8 vessels) programs. The SSA will establish a management framework and common terms through which Austal Defence Australia will deliver the Commonwealth's key Tier 2 surface shipbuilding programs in Western Australia. Shipbuilding programs under the SSA will generally be structured on a 'Target Cost Incentive' basis. The SSA will also seek to develop a robust supply chain in the Henderson shipbuilding precinct to deliver the Commonwealth's continuous naval shipbuilding capability in Western Australia and meet strategic objectives for the development of Australian sovereign shipbuilding capability. To protect its interest in continuous shipbuilding and to preserve its right to ensure Austal Defence Australia continues to deliver Commonwealth programs, the Commonwealth will be issued a single 'Sovereign Share' in Austal Defence Australia and will enter into a Shareholders Deed with Austal to regulate the affairs of Austal Defence Australia.

Austal anticipates that Austal Defence Australia will generate significant revenue from the SSA (for its management and delivery of the Landing Craft-Medium program) over the 8-year term of the proposed Landing Craft-Medium contract, in addition to the construction revenue that will be accrued by Austal Ships. The revenue earned by Austal Defence Australia for management and delivery of the Landing Craft - Heavy project, if awarded, remains to be determined although it is noted that this would be a substantially larger project than the Landing Craft - Medium project.

The design and construction of the Landing Craft Medium ('LCM') is intended to be the first program to be awarded and delivered under the SSA. The CoA and Austal expect contracts for the LCM program to be finalised in Q1 FY2026 and that these will provide for the construction of 18x LCMs for the Australian Army over eight years for a price of A$1-1.3 billion. The final vessel is expected to be scheduled for delivery in 2032. Subject to resolution of contractual discussions, delivery of the 8 x Damen-designed LST100 Landing Craft Heavy vessels for the Australian Army, announced by the Commonwealth in November 2024, is expected to follow the Landing Craft - Medium, with the Commonwealth and Austal expected to be under contract by the end of the 2025 calendar year.