Printer Friendly

BRITISH AEROSPACE AGREES SALE OF CORPORATE JETS BUSINESS

 WASHINGTON, June 1 /PRNewswire/ -- British Aerospace, plc has agreed the sale of its Corporate Jets business, including the share capital of Arkansas Aerospace Inc., to Raytheon Company (NYSE: RTN) for a consideration of 250 million pounds, payable in cash on completion. The agreement is subject to certain regulatory approvals and completion is expected to take place as soon as these are obtained.
 Raytheon has entered into an agreement for the supply of airframe assemblies from British Aerospace's Airbus division, for a minimum of three years from completion. Further agreements include the assignment and license of intellectual property and the provision of certain other services, including technical assistance, to Raytheon. These agreements are conditional, interalia, upon the completion of the sale agreement referred to above.
 Description of Corporate Jets
 Corporate Jets designs, assembles, completes and sells business jets and provides support to customers for aircraft in service. Its current products comprise the 125-800 and 125-1000 aircraft, the latest versions of the 125 series, which first entered service in 1964. Over 800 of the 125 series aircraft have been delivered to date.
 Corporate Jets operates from facilities at Chester and Hatfield in the United Kingdom and near Dulles International Airport in the United States. Corporate Jets purchases airframe assemblies, comprising fuselages, wings and sub-assemblies, which are manufactured by BAe's Airbus division at its Chester site.
 Arkansas Aerospace, Inc., a wholly-owned subsidiary of British Aerospace, Inc., is primarily engaged in the completion of business jet aircraft to customer specifications and aircraft maintenance. Completion activities include the installation of avionics equipment, the fabrication and installation of customized interiors and external paintwork. Arkansas Aerospace, Inc. operates from Little Rock, Ark.
 Background to and Reasons for the Sale
 The agreement to sell the Corporate Jets business results from an approach by the Raytheon company. An earlier review in Spring 1992 of the British Aerospace portfolio of business activities had, however, identified the Corporate Jets activities as not core to the group. At that time discussions were held with potential buyers or partners for the business but no satisfactory proposal was received.
 Terms of Sale
 The consideration for the sale of Corporate Jets amounts to 250 million pounds, payable in cash on completion. The business is being sold free of debt or cash; amounts owing by or to BAe companies in respect of trading items will be settled in the ordinary course of business.
 The transaction has been structured on the basis that the net assets at completion will amount to 194 million pounds. To the extent that completion net assets exceed this figure due to higher stock and work- in-progress levels, Raytheon has agreed to purchase such additional stock and work-in-progress in due course.
 Raytheon has entered into a contract for the continued supply by BAe of airframe kits for a period of at least three years from completion. This agreement will provide a continued workload for BAe's Airbus division in Chester. In 1992, the sales value of such supplies by Airbus division to Corporate Jets was approximately 30 million pounds. The supply agreement is conditional upon the completion of the sale agreement.
 BAe has also entered into agreements with Raytheon, for the assignment and license of certain intellectual property and the provision to Raytheon of technical and other assistance to enable Raytheon to manufacture the 125 series aircraft. These agreements are also conditional upon the sale agreement being completed.
 Financial Implications of the Sale
 In 1992, Corporate Jets (including Arkansas Aerospace, Inc.) made an operating profit before interest and launch costs of 6 million pounds on turnover of 308 million pounds.
 The aggregate cash proceeds realized from the sale amounting to 250 million pounds will be applied initially to reduce the indebtedness of the group.
 The sale will enable British Aerospace to concentrate resources on its principal activities. In addition to the substantial cash proceeds, the group balance sheet will be strengthened by the net gain on the sale.
 Commenting on the sale, British Aerospace, plc Chairman John Cahill said: "The sale of Corporate Jets is an important milestone in the strategy of British Aerospace to focus on its principal business areas. The proceeds raised will significantly strengthen the balance sheet and cash position of the group. The sale is also good for the Corporate Jets business and its employees. Raytheon's substantial resources will enable the further potential of the highly successful 125 series to be realized."
 British Aerospace is being advised on the sale by Kleinwort Benson Limited.
 -0- 6/1/93
 /CONTACT: Karen Wood of BAe Corporate Jets, Inc., 703-406-1130 (United States), or Ian Woodward of British Aerospace, plc, 252-383-819 (United Kingdom)/
 (RTN)


CO: British Aerospace, plc; Raytheon Company; Arkansas Aerospace, Inc. ST: District of Columbia IN: AIR ARO SU:

DC-IH -- DC015 -- 3934 06/01/93 12:02 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 1, 1993
Words:796
Previous Article:CRI ACQUIRES $116 MILLION OF COMMERCIAL REAL ESTATE LOANS FROM DISSOLVING S&L, PREVENTS FEDERAL BAILOUT
Next Article:ARRIVAL OF BIG FOOT (BOTTLE) IN NOVI BOOSTS COMPANY'S RECYCLING EFFORTS
Topics:


Related Articles
BUSINESS EXPRESS ORDERS 20 BRITISH AEROSPACE RJ70 REGIONAL JETS
ROY H. NORRIS NAMED CORPORATE VICE PRESIDENT-MARKETING/SALES BY GULFSTREAM AEROSPACE CORPORATION
BRITISH AEROSPACE TO RETAIN CORPORATE JET BUSINESS
RAYTHEON ACQUIRES CORPORATE JETS INC. FROM BRITISH AEROSPACE INC.
RAYTHEON COMPLETES ACQUISITION OF BRITISH AEROSPACE INC. CORPORATE JETS LTD.
Poised for takeoff: BAe news is good medicine for state's aviation industry.
RAYTHEON AIRCRAFT GROUP AFFIRMS LEADERSHIP IN WORLD MARKETPLACE
GULFSTREAM AEROSPACE ELECTS THOMAS D. BELL AS VICE CHAIRMAN
BANNER AEROSPACE TO SELL TWO UNITS
BANNER AEROSPACE ANNOUNCES SALE OF TWO UNITS

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters