AEA Technology: asset sale
AEA Technology plc: Proposed Sale of Portfolio Companies
The Board of AEA Technology plc (the "Company") announces today that it has reached a conditional agreement to sell a portfolio of non-core assets ("the Portfolio Companies") to funds advised by Coller Capital, a leading global investor in private equity secondary interests for a consideration of £40 million in cash before transaction costs and taxation, on a debt free basis (the "Proposed Sale"). The Company is required to ensure that, as at the completion date, the Portfolio Companies have positive net cash/debt balances in aggregate of £2.5 million, consistent with expected cash balances at completion.
Net cash receipts are expected to be £31.8 million, after the deduction of certain liabilities and after transaction costs and taxation. In addition, the Company will make a one-off £7.5m lump sum payment to reduce its liability to the AEA Technology Pension Scheme.
The Proposed Sale forms part of a Group refinancing plan developed by the Board in light of the unsatisfactory financial performance of the Group in the financial year ended 31 March 2005 with the primary aim of reducing Group debt to a sustainable level.
For the twelve months ended 31 March 2005, the Portfolio Companies generated profits before interest and tax of £1.8 million and profits before tax of £0.5 million on turnover of £78.0 million. As at 31 March 2005 the Portfolio Companies had negative net assets of £12.1 million and gross assets of £52.0 million.
In view of the size of the Proposed Sale relative to the Group, the Proposed Sale is conditional, amongst other things, upon the approval of shareholders. This approval is to be sought through a Resolution at the Extraordinary General Meeting of the Company to be held at 11.00 a.m. on 30 September 2005. A circular to shareholders will be posted shortly containing notice of the EGM and further details of the Proposed Sale.
Bernard Bulkin, Chairman of AEA Technology, commented:
"This is an important step forward because it meets a long held promise to shareholders of improving the focus of this business. As a result, the Board believes that AEA is now well-positioned to improve its financial and trading performance."
Andrew McCree, Chief Executive of AEA Technology, commented:
"The management team is now focussed on growing the Environment business and continuing to improve the Rail business in a tough market. Cost reduction will continue as a priority. Overall the Group as a result of this deal will have a materially lower debt level and a lower cost base for the future."
Jeremy Coller, Chief Executive of Coller Capital, commented:
"We believe these businesses require investment to reach their full potential. We will provide that investment."