27th Mar 2008 13:30
Cobham PLC27 March 2008 27 March 2008 COBHAM AWARDED FSTA AIR TO AIR REFUELLING CONTRACTS WORTH £150M Further to the announcement today by AirTanker Limited ('AirTanker') that it hassecured a 27 year contract with the UK's Ministry of Defence for the provisionof an advanced air to air refuelling and transport capability to the Royal AirForce, Cobham plc ('Cobham') is delighted to confirm its role on the programme. The Future Strategic Tanker Aircraft ('FSTA') programme * AirTanker shareholders are Cobham, EADS, Rolls-Royce, Thales UK and VT Group * The contract is for 27 years with the UK's Ministry of Defence for the provision of an advanced air refuelling and transport capability to the Royal Air Force. * AirTanker will provide a fleet of 14 new Airbus A330-200 tanker aircraft powered by Rolls Royce Trent engines. * The aircraft will come into service from 2011, replacing the previous, existing fleet of VC-10 and Tristar refuelling aircraft. * The contract includes provision by AirTanker Services Limited ('AirTanker Services') of all necessary infrastructure, training, maintenance, flight management, fleet management and ground services to enable air-to-air refuelling and transport missions worldwide. * A new purpose-built tanker facility and base is to be constructed at RAF Brize Norton in Oxfordshire with building commencing in 2008. The AirTanker consortium has completed its financing for the programme, raisingapproximately £2.5 billion through a mixture of senior debt, shareholder equityand subordinated debt, for investment in the fleet of new aircraft, and theconstruction of the new state-of-the-art operational base and associatedinfrastructure. Cobham's role in the programmeEach of the FSTA aircraft will be supplied with two wing mounted air refuellingpods and five will be fitted with Fuselage Refuelling Units to enable the FSTAaircraft to refuel large receiver aircraft. All the air refuelling equipmentwill be supplied by Cobham Mission Systems in Wimborne, Dorset, UK withdeliveries commencing in 2010. Twelve of the fourteen aircraft will be convertedby Cobham Aviation Services at nearby Bournemouth International Airport,commencing in 2011. The first two aircraft will be converted by EADS in Spainwith the support of Cobham engineers. Cobham has contracts with EADS and AirTanker Services with a total value of some£150m for the provision of air refuelling equipment, the conversion of the A330aircraft tankers and associated through life support. Cobham's role in the AirTanker consortiumCobham has a 13.3% shareholding in AirTanker Holdings Limited, the holdingcompany of AirTanker, and a 5% shareholding in AirTanker Services. Cobham'stotal investment is £24.4m, provided through a combination of equity andsubordinated debt to AirTanker Holdings Limited, structured such that there is aminimal cash outflow. The bulk of the shareholder funding is provided by way ofan equity bridge loan, which Cobham is supporting though the issue of letters ofcredit. Cobham has provided certain guarantees, letters of credit and associated fundingfacilities to EADS, AirTanker and AirTanker Services to support the delivery ofthe services to the Ministry of Defence and to support the subcontracts enteredinto by its subsidiary businesses. Cobham provides guarantees that are capped atthe value of its refuelling equipment and aircraft conversion revenues, and theywill reduce as the programme matures. Cobham will shortly receive approximately £10m as a cash reimbursement of itsbid costs, representing the amount previously expensed, which will be recognisedseparately in underlying earnings progressively over the next three years as theprogramme matures. Allan Cook, Cobham Chief Executive said:"This is excellent news for Cobham and the whole AirTanker team. We have workedhard over the last seven years to get to this position with our customer and Iam certain that the RAF will be delighted with the increased level ofcapability. March has been an eventful month for Cobham with the selection ofthe Northrop Grumman/EADS/Cobham team for the USAF Tanker and now award of theFSTA contract. The FSTA contract will sustain up to 120 long term jobs in Dorsetand underpin our development plans for a new engineering centre of excellence inWimborne." ENQUIRIES Cobham plcAllan Cook, Chief Executive +44 (0)1202 882020Warren Tucker, Chief Financial Officer +44 (0)1202 882020Julian Wais, Director of Investor Relations +44 (0)1202 857998Julian Hellebrand, Group Director of Communications +44 (0)1202 857651 Weber Shandwick FinancialSusan Ellis/Louise Robson +44 (0)20 7067 0700 Dresdner Kleinwort (financial adviser to Cobham on the FSTA contract)David Smith +44 (0)20 7623 8000Faisal Tabbah +44 (0)20 7623 8000 NOTESCobham's products and services have been at the heart of sophisticated militaryand civil systems for more than 70 years, keeping people safe, improvingcommunications and enhancing the capability of land, sea, air and spaceplatforms. The Company has four divisions employing more than 10,000 people onfive continents, with customers and partners in over 100 countries, and annualrevenues of more than £1bn. Cobham Mission SystemsThe Mission Systems Division is the market leader for air refuelling, providinginnovative fourth generation nose-to-tail solutions to defence customers aroundthe world. From tactical tanking for helicopters, buddy-buddy and specialoperations to strategic tanking for deployment and sustainment of fixed androtary wing aircraft, the division has an enviable track record for solutionsthat people can trust. Specialising in wing-tip to wing-tip solutions, thedivision also designs and manufactures a range of sophisticated weapons carriageand release including missile launchers, pneumatic and pyrotechnic bombejection, defensive aids, chaff and flare systems and pneumatic multi-storecarriers. As one of the world's leading producers of aviation oxygen to the military andcivil markets, Mission Systems uses the latest technology to take oxygen fromthe atmosphere and regulate the flow, to allow pilots and passengers to breatheat altitude. In addition pneumatic technology is used for fin actuation inmissiles, with a core position in cryogenic cooling for various land andaviation markets. In the personal survival market, the Division providesspecialist products for naval and land applications, including aircrewrestraints, parachute release mechanisms and flotation gear. Cobham Aviation Services operates more than 150 fixed and rotary wing aircraftglobally. It operates the largest civil maritime surveillance contract in theworld, covering more than 37,000 km of coastline and trains all UK helicopterpilots for the Navy, Air Force and Army. The Division provides modernbattlespace air warfare training and essential flight inspection services forcivil and military airports in the UK, Europe and beyond. It also specialises inthe conversion and support of a wide range of civil and military platformsincluding the Nimrod MRA2, R1 and Sentry E3-D fleets. The Division hasresponsibility for overseeing Cobham's involvement in the Future StrategicTanker Aircraft (FSTA) programme. Dresdner Kleinwort Limited, which is authorised and regulated by the FinancialServices Authority, is acting for Cobham plc and for no-one else in connectionwith the contents of this announcement and will not be responsible to anyoneother than Cobham plc for providing the protections afforded to clients ofDresdner Kleinwort Limited, or for affording advice in relation to the contentsof this document or any matters referred to herein. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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