TIDMAVG
RNS Number : 0261S
Avingtrans PLC
12 March 2021
12 March 2021
Avingtrans plc
("Avingtrans" or the "Company")
Disposal of Peter Brotherhood Limited
Avingtrans plc, which designs, manufactures and supplies
critical components, modules, systems and associated services to
the energy, medical and industrial sectors, is pleased to announce
that it has completed the sale of Peter Brotherhood Limited ("Peter
Brotherhood") to Howden, a leading global provider of mission
critical air and gas handling products, for a total consideration
(enterprise value) of GBP35.0 million (the "Disposal"), which,
after adjustment for debt and working capital, will result in the
Company receiving net proceeds of approximately GBP30.6 million,
before transaction costs.
Background to the Sale
Peter Brotherhood, based in Peterborough, UK, which sat within
Avingtrans' Process Solutions and Rotating Equipment ("PSRE")
division, specialises in the design, manufacture and servicing of
performance-critical steam turbines, turbo gen-sets, compressors,
gear boxes and combined heat and power systems. It was acquired in
September 2017, as part of the acquisition of the Hayward Tyler
Group ("HTG") which attracted total consideration of GBP52.7m, of
which Peter Brotherhood represented approximately GBP9.3m.
Therefore, the Disposal represents a gross return on the original
capital investment of almost four times.
The Disposal has been orchestrated in-line with the Company's
long term Pinpoint-Invest-Exit ("PIE") strategy, which aims to
realise value for shareholders. Peter Brotherhood was in difficulty
when it was acquired by Avingtrans and a rapid restructuring
programme was implemented, followed by a strategy reset. This led
to a project to recruit and train an improved sales force, multiple
sales agents and a strengthening of the aftermarket team, which
proved to be the key to recovery and increased value.
To make the next step change in performance at Peter
Brotherhood, Avingtrans would have had to enter a multi-year
programme of investment. Therefore, the Board decided that the time
was right to execute an exit plan, to optimise value for
shareholders and to unite the team at Peter Brotherhood with
Howden, a global leader in air and gas handling products, which can
take the business to the next level.
Peter Brotherhood's revenues for the year ended 31 May 2020 were
GBP25.7 million, resulting in a contribution to Group operating
profits of GBP3.3 million. At the date of sale, the unaudited
pro-forma net assets being disposed of, after adjusting for
intercompany funding, are approximately GBP5.0m.
Terms of the Sale
The Disposal is for an enterprise value of GBP35.0 million
which, after adjustment for debt and working capital, will result
in the Company receiving net proceeds of approximately GBP30.6
million, before costs. There are no earn out arrangements, or
deferred consideration.
The sale and purchase agreement contains warranties and
indemnities by the Company usual for a transaction of this nature
and a covenant by the Company not to compete in the steam turbine
and associated market sectors for a limited period of time.
Future of the Group Post Sale
Following the Disposal, the Group will retain its three core
divisions being:
-- Energy - Engineered Pumps and Motors
-- Energy - Process Solutions and Rotating Equipment
-- Medical and Industrial Imaging
The impact of the Disposal will therefore to be to reduce the
size of the PSRE division, which generated segmental revenues and
operating profits (including Peter Brotherhood) of GBP52.7 million
and GBP3.9 million respectively in the year to 31 May 2020.
Use of Sale Proceeds
The Board will consider the application of the proceeds from the
Disposal following Completion, but it is anticipated that they will
be used as follows:
-- To retain a portion of the proceeds to invest in the current
divisions, including to fund the recently announced GBP3.2m
investment in Magnetica - to focus on becoming a market leader in
the production of compact, superconducting, helium-free MRI
systems, targeted at specific applications - including orthopaedic
imaging and veterinary imaging;
-- To partially repay the Group's existing debt, whilst
retaining appropriate banking facilities and relationships for the
future effective operation of the Group; and
-- To continue to review potential opportunities, which enhance
the Board's Pinpoint-Invest-Exit (PIE) strategic model.
The PSRE division will now concentrate on the recovery of Booth
Industries and on further business growth opportunities in the
nuclear sector - especially at Metalcraft and at the Fluid Handling
business in Scotland.
Commenting on the announcement, Steve McQuillan, Chief Executive
Officer of Avingtrans said:
"This well executed exit of Peter Brotherhood once again
demonstrates the success of the Avingtrans PIE strategy. Peter
Brotherhood was in poor shape when we acquired it in 2017, but it
has been turned around to make it attractive to specialist Groups
in its sectors. The result is enhanced value for Avingtrans
shareholders and the potential opportunity to repeat the PIE model
elsewhere.
"We are also delighted that the sale unites the Peter
Brotherhood team with Howden, another great British engineering
company. We wish the new team every success in their future
together.
"We constantly strive to grow and develop our business portfolio
and we are always keen to take advantage of potential exits and new
prospects to add further value."
Enquiries:
Avingtrans plc 01354 692391
Roger McDowell, Chairman
Steve McQuillan, Chief Executive Officer Stephen King,
Chief Financial Officer
N+1 Singer (Nominated Adviser) 02074 963000
Shaun Dobson/Alex Bond (Corporate Finance) Rachel Hayes
(Corporate Broking)
SEC Newgate (Financial PR) 02076 539850
Adam Lloyd/ Tom Carnegie
About Avingtrans plc:
Avingtrans designs, manufactures and supplies original
equipment, systems and associated aftermarket services to the
energy, medical and industrial markets worldwide.
Business units
Hayward Tyler - Luton & East Kilbride, UK and USA, China and
India
Specialises in the design, manufacture and servicing of performance-critical
motors and pumps for challenging environments.
Energy Steel, Inc - Lapeer, Michigan, USA
Provider of custom fabrications for the nuclear industry, specialising
in: OEM parts obsolescence; custom fabrications; engineering
design solutions; product refurbishment; on-site technical support.
Stainless Metalcraft Ltd - Chatteris, UK and Chengdu, China
Provider of safety-critical equipment for the energy, medical,
science and research communities, worldwide, specialising in
precision pressure and vacuum vessels and associated fabrications,
sub-assemblies and systems.
Booth Industries - Bolton, UK
Designs, manufactures, installs and services doors and walls
which can be tailored to be: blast &explosion proof; fireproof;
acoustically shielded; high security/safety; or combinations
of the above
Ormandy Group, Bradford, UK
Design, manufacturers and servicing of off-site plant, heat
exchangers and other HVAC (heating, ventilation and air conditioning)
products
Composite Products Ltd - Buckingham, UK
Centre for composite technology, parts and assemblies, serving
customers in industrial markets.
Scientific Magnetics - Abingdon, UK
Designs and manufactures superconducting magnet systems and
associated cryogenics for a variety of markets including MRI
and provides services for Nuclear Magnetic Resonance instruments.
Tecmag Inc, Houston, USA
Designs, manufactures and installs instrumentation, including
consoles, system upgrades, and probes, mainly for Magnetic Resonance
Imaging (MRI) and Nuclear Magnetic Resonance (NMR) systems.
Magnetica Ltd - Brisbane, Australia
Magnetica Limited specialises in the development of next generation
MRI technologies, including dedicated extremity MRI systems
and MRI system components. Magnetica has remained at the forefront
of MRI systems technology, successfully designing and commercialising
a 1.5 Tesla extremity MRI superconducting magnet that is now
the heart of over two hundred MRI systems world-wide. Magnetica
has successfully built and tested a compact, integrated 3 Tesla
orthopaedic MRI system, demonstrating clinical-quality imaging.
Commercialisation of this system (and others) is on-going.
About Howden:
Howden is a leading global provider of mission critical air and
gas handling products. Howden enables our customers' vital
processes which advance a more sustainable world. Based in Glasgow,
Scotland, Howden has over 160 years heritage as a world-class
application engineering and manufacturing company with a presence
in 34 countries. Howden manufactures highly engineered fans,
compressors, heat exchangers, steam turbines, and other air and gas
handling equipment, and provides service and support to customers
around the world in highly diversified end-markets and
geographies.
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END
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