THE company which has managed Rosyth Dockyard in Fife for the Ministry of Defence since the late eighties has finally won its battle to buy it.

Babcock International announced yesterday it had now signed a privatisation agreement with the MoD to purchase the Royal Dockyard - which a senior management official said later would guarantee jobs and a work programme into the next century.

Defence sources were regarding the purchase of the yard, which has played a major part in two wars, and subsequent conflicts in the Falklands and Gulf campaigns, as good business.

It has been bought for #27m, although the net payment is #20.5m.

In a complicated financial settlement, Babcock has an ``abatement'' of #6.5m which takes on board its assumption of redundancy liabilities after the spring of 2006.

Of the #20.5m, #14.5m is payable in cash on completion, and the deferred amount of #6m is due if and when a contract for the refit of a second aircraft carrier is signed.

Tied to the deal is the variation of a scheme of redundancy entitlements at the yard, which employs just over 3000. Under the agreement, workers' redundancy payments will be reduced until the time that the levels are comparable to similar businesses in the private sector.

An important part of the deal for Babcock management is that a promised ten-year workload covers the refitting of nuclear submarines until at least 2002, and other work on carriers, destroyers, frigates, and smaller vessels such as minehunters and minesweepers.

That was part of the campaign mounted locally by management and unions when it lost out on a programme of refitting the new Trident submarines at Rosyth, which was awarded to Devonport at Plymouth.

Yesterday, Mr David Batty, managing director of Rosyth Royal Dockyard commented: ``In our view, it is a good deal for both parties.

``With this workload coming through, it provides a very stable establishment for the next five years.''

He said it was envisaged that despite the redundancy programme, roughly the present strength of workforce could be retained.

The imminent sale of the yard was welcomed last month by Rosyth unions, and Fife Council, following a visit to the Scottish Grand Committee in Cupar by Defence Secretary Michael Portillo. He said privatisation could save the taxpayer #100m over the next decade.

Last night, Mr Brian Negus, convener of shop stewards, remained critical of the time taken over the privatisation issue, regarding the deal as a ``snip''.

He said it had taken since 1994, leading to a period in which many jobs had already been lost at Rosyth. Consequently, unions had been rushed into agreements with management to protect the remaining workforce.