17th July 2000
("BBA") sells automotive friction materials division for £389 million
BBA announces today that it has reached agreement on the terms of the sale of its automotive friction materials division ("Automotive Friction") to HSBC Private Equity Limited ("HSBC") for an aggregate consideration of the currency equivalent (see note below) of £389.2 million on a debt free, cash free basis. BBA will retain the rail friction business acquired for £28 million in 1997. The consideration is subject to adjustment based on working capital at completion.
The consideration will be satisfied by the payment to BBA of the currency equivalent (see note below) of £269.7 million in cash and the issue to BBA of £119.5 million in principal amount of Loan Notes, unconditionally guaranteed by Morgan Guaranty Trust Company of New York, part of JP Morgan. The Loan Notes are redeemable two years after completion of the transaction. Completion is subject only to regulatory approvals and is expected to take place prior to the end of August.
Tax payable on the transaction is not expected to exceed £20 million.
Following the transaction, BBA will consist of two focused divisions, Aviation Services and Materials Technology, with leading positions and strong growth prospects in their increasingly global markets. BBA's objective is to drive growth in Aviation Services and Materials Technology by extending their global reach, investing in new technologies and offering customers a unique package of services.
BBA intends to use the proceeds arising from the sale of Automotive Friction initially to pay down existing group borrowings and enable further increased investment in the Aviation Services and Materials Technology divisions. BBA's strengthened financial position following the disposal will also provide greater flexibility to pursue strategic opportunities that may arise.
Roberto Quarta, Group Chief Executive, BBA Group plc said:
"This completes BBA's transition, which started in 1994, from a diversified industrial and engineering group to a focused Aviation Services and Materials Technology group. We have successfully developed Automotive Friction into a leader in its markets, and although it is performing well, the Board firmly believes that we will maximise value for shareholders through its disposal.
Looking ahead, BBA will be strongly positioned in two growth areas: Aviation Services and Materials Technology. Both are global market leaders and represent real opportunities for us to invest for growth organically and through acquisition, building BBA's services capability through the development of superior technologies and international brands. We are looking to the future with confidence."
In the year ended 31 December 1999, Automotive Friction made an operating profit (after corporate cost allocation) of £41.2 million based on turnover of £300.6 million. Net assets as at 31 December 1999 amounted to £148.9 million.
Note: Based on the rates £1:Euro1.60 and £1:$1.50, being the closing rates on 14 July.
Merrill Lynch International, which is regulated in the United Kingdom by The Securities and Futures Authority Limited, is acting for BBA in connection with the transaction described in this announcement and for no-one else and will not be responsible to anyone other than BBA for providing the protections afforded to customers of Merrill Lynch International or for providing advice in relation to the transaction.
ENQUIRIES:
Roberto Quarta, Chief Executive, BBA Group PLC, 020 7842 4900
Roy McGlone, Finance Director
Philip Yates, Managing Director, Merrill Lynch, 020 7628 1000
Michael Herzog, Vice President
Susan Gilchrist/Nigel Prideaux, Brunswick, 020 7404 5959
2004 Preliminary Results Presentation, 23rd February 2005