Chemring to sell European munitions business
This strategic disposal - which is conditional (inter alia) upon the approval of Chemring shareholders and regulatory approval in Italy - re-shapes the Group for future growth and enables Chemring to refocus on its core competencies.
Mark Papworth (above), Chief Executive Officer of Chemring, said: “The sale of our European Munitions Business implements a key recommendation of our strategic review and represents a significant milestone as we reposition Chemring for future growth. It not only enables us to strengthen our balance sheet through the reduction of net debt, but also provides us with flexibility to invest in our core technologies.
"Following the Disposal, Chemring will have technologies, products and market positioning which provide opportunities to achieve sustainable high margins and revenue growth.”
Chemring will become a focused defence technology business with well-established positions in Sensors & Electronics, Countermeasures and Energetic Systems.
The company will see significant reduction in pro-forma net debt of £120.4 million from £248.7 million at 31 October 2013 to £128.3 million. Net Disposal proceeds will be applied to repay part of the Group’s revolving credit facility with the balance offered to holders of the Group’s loan notes, with whom it has agreed improved arrangements.
Since Chemring’s IMS released on 27 February 2014, there has been no material change to the Group’s current trading and prospects. The Disposal is expected to have a dilutive effect on underlying earnings per share in the current financial year ending 31 October 2014.
