TIDMHAYT
RNS Number : 8867B
Hayward Tyler Group PLC
12 October 2015
12 October 2015
Hayward Tyler Group plc
("Hayward Tyler", the "Company" or "Group")
Acquisition
The directors of Hayward Tyler Group plc (AIM: HAYT.L), the
specialist engineering group, are delighted to announce the
conditional acquisition ("the Acquisition") of the trade and assets
of the Peter Brotherhood business from Dresser-Rand Company Ltd, a
Siemens-owned business, for a total consideration of US$15 million,
subject to an adjustment for a working capital benchmark. The
consideration will be paid in cash and will be wholly funded
through new facilities from Royal Bank of Scotland ("RBS").
Highlights
-- Peter Brotherhood is a UK engineering business specialising
in steam turbines, reciprocating
gas compressors and combined heat and power units for the power
generation, oil and gas and
marine markets;
-- The acquisition is expected to be immediately earnings enhancing in Hayward Tyler's current
financial year and significantly earnings enhancing in the first
full financial period following
completion of the Acquisition;
-- The transaction is to be funded through GBP14 million of new facilities from RBS;
-- Peter Brotherhood recorded normalised operating profit(1) of US$3.2 million in 2014;
-- The deal increases Hayward Tyler's scale, number of customers and orders, thus diversifying
the Group's operations;
-- The acquisition gives the Group access to a range of new
customers including Keppel Shipyard and deepens relationships with
existing customers including Rolls Royce;
-- This new client base offers Hayward Tyler the opportunity to cross-sell products across both
customer bases; and
-- The Group intends to explore the potential for a sale &
leaseback of the 11.5 acre Peterborough
property in the near term.
(1) Normalised profit is calculated by carving out the Peter
Brotherhood division from Dresser-
Rand Company Ltd
Details of the Acquisition
Peter Brotherhood is a UK engineering business based in
Peterborough that can trace its history back to 1867. More recently
it has focused on energy efficient solutions for land and marine
based applications including steam turbines, reciprocating gas
compressors and combined heat and power units for the power
generation, oil and gas and marine markets. It was acquired by
Dresser-Rand Inc in 2008 (a company that was subsequently acquired
by Siemens) and is now a non-core disposal.
Peter Brotherhood is the UK's only producer of steam turbines
with an output up to 40MW which has applications in waste heat
recovery, the FPSO and FLNG markets and the British Navy Astute
class submarine new build program. Steam turbines tend to have
higher operational availability and lower operating costs, when
compared to gas turbines.
Peter Brotherhood has nearly 1,500 units that continue to
operate across 100 countries globally, having supplied steam
turbines to many of the world's leading operators including
Woodside, SBM, Saipem, Aker, Fred Olsen, Samsung and Maersk.
In the year to 31 December 2014, the Peter Brotherhood business
(on a stand-alone basis) generated revenues of US$46.7 million and
normalised operating profit of US$3.2 million. The net assets being
acquired had an adjusted unaudited value of US$16.0 million as at
30 June 2015.
Under the terms of the Acquisition, Hayward Tyler will be
acquiring the Peter Brotherhood trade and assets for the total cash
consideration of US$15 million, subject to an adjustment for a
working capital benchmark, payable on completion. The assets
include an 11.5 acre freehold property in Peterborough, all of the
plant and machinery, transferring book debts and stock.
The Acquisition is scheduled to complete on 30 October 2015 and
is conditional only on the completion of the TUPE process relating
to the 146 employees based at the Peterborough facility who will
join the newly formed Peter Brotherhood Ltd, a wholly-owned
subsidiary of Hayward Tyler Group.
Reasons for the Acquisition
Over the past near 150 years Peter Brotherhood has built up a
leading reputation in its end markets for reliability and on-time
delivery at a competitive price. The Board believes there is a
significant opportunity to re-invigorate the Peter Brotherhood
brand to increase revenue from existing customers and its existing
installed base of nearly 1,500 units globally. The Board is also
confident that, operating within the Hayward Tyler Group, Peter
Brotherhood will benefit from improved manufacturing processes,
broader geographical coverage, access to overseas service
facilities and accelerated investment in new product development
and design.
New Banking Facilities
The acquisition will be funded through a package provided by the
Group's existing bankers, Royal Bank of Scotland. This package
provides additional facilities, an attractive cost of borrowing,
extended term and further covenant headroom whilst Hayward Tyler
develops, invests and grows the Peter Brotherhood business. A
summary of the additional facilities provided is as follows:
Description Amount GBPm Margin (over LIBOR) Term (years)
-------------------- ------------ -------------------- -------------
Property term loan 2.5 3.25% 5
-------------------- ------------ -------------------- -------------
Term loan 3.5 4.25->3.25% 3
-------------------- ------------ -------------------- -------------
Revolving credit
facility 3.0 3.75->3.25% 3
-------------------- ------------ -------------------- -------------
Bridging facility 5.0 4.75% 1
-------------------- ------------ -------------------- -------------
Total 14.0
-------------------- ------------ -------------------- -------------
Bonds & guarantees 0.9 Commission 2.3% n/a
-------------------- ------------ -------------------- -------------
The financial covenants have been amended to reflect the new
extended facilities and are as follows:
-- Interest cover >4.5x;
-- Leverage <3.0x reducing to <2.0x over the term;
-- Cash flow cover >1.0x rising to 1.1x over the term;
-- Monitoring formula <1.0x.
The Group also intends to explore the potential for a sale &
leaseback of the Peterborough property in the near term, in order
to repay the bridging finance facility detailed above.
Ewan Lloyd-Baker, CEO of Hayward Tyler, added:
"Over the last four years we have transformed Hayward Tyler into
a forward-thinking, profitable market-leader in its specific niche
markets. We believe the same philosophy will allow us to drive
significant growth from Peter Brotherhood's strong installed base
and into new market areas and technologies. This acquisition, which
the Directors expect will be significantly earnings enhancing
during the first full financial period following completion of the
Acquisition, will also underpin the strength and depth of the wider
Hayward Tyler group and set the stage for our next level of growth
across the global energy sector whilst further cementing our
position in the oil & gas and specialty chemical markets. The
Board likewise remains fully committed to delivering on its
progressive dividend policy in the current financial year."
Enquiries:
Hayward Tyler Group plc
Ewan Lloyd-Baker, Chief Executive Officer Tel: +44 (0)1582
Nicholas Flanagan, Chief Financial Officer 731144
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Akur Limited - Corporate Finance Adviser
David Shapton Tel: +44 (0)20 7493
Tom Morrell 3631
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FinnCap Limited - NOMAD & Broker
Matt Goode - Corporate Finance Tel: +44 (0)20 7220
Grant Bergman - Corporate Finance 0500
Tony Quirke - Corporate Broking
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GTH Communications Limited
Toby Hall Tel: +44 (0)7713
341072
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About Hayward Tyler Group plc
Hayward Tyler Group plc is a market leader in the design,
manufacture and servicing of performance-critical motors and pumps
for the harshest of environments. Core markets for the group
include: oil & gas exploration - both topside and subsea; power
generation - both conventional and nuclear; and the
chemical/industrials sector. With facilities in the UK, US, China
and India, the Group has a proven reputation for providing
innovative, reliable technological solutions built on a proud
heritage stretching back over 200 years. www.haywardtyler.com
This information is provided by RNS
The company news service from the London Stock Exchange
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