4th May 2016 07:56
LONDON (Alliance News) - Components manufacturer Avingtrans PLC on Wednesday said it has agreed to sell its aerospace division to a company controlled by funds managed by Silverfleet Capital Partners LLP.
Avingtrans has sold the business for an enterprise value of GBP65.0 million and, after adjusting for debt, working capital and associated costs, will get around GBP52.0 million in proceeds from the sale.
Having completed the deal for the pipe business Avingtrans acquired from Rolls-Royce Holdings PLC in March, the company said it felt the majority of the targets for the aerospace business had been met, sparking a strategic review and the subsequent sale of the unit.
The company said it intends to continue developing its remaining energy and medical-focused businesses and is planning to return a substantial portion of the proceeds to shareholders.
Due to the size of the deal, the sale will constitute a fundamental change of business for Avingtrans under AIM rules and will require shareholder approval, which will be sought at a meeting set for May 25.
"I am delighted to announce the agreement to sell the Aerospace division. Following a strategic review the board concluded that it was the right time to consider the disposal of the Aerospace business which had achieved the majority of its targets," said Steve McQuillan, chief executive of Avingtrans.
Elsewhere, Avingtrans said trading in the financial year so far, to the end of November 2016, has been in line with its expectations.
The energy and medical division has continued to recover, Avingtrans said, and should meet its expectations for the full year. However, sales have been lower than anticipated, primarily due to the production start-up at Sellafield, where Avingtrans has secured a waste storage container contract, taking longer than had been expected.
The restructuring of the energy and medical arm is now well advanced, Avingtrans said, and the business is now on a firm footing to win new contracts.
The aerospace division, meanwhile, has traded marginally ahead of expectations in profit terms, driven by the acquisition of the Rolls-Royce pipe business.
Avingtrans shares were up 12% to 183.85 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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