By Pino Modola in Genoa and Helen Massy-Beresford in London
Italian engine manufacturer Avio is preparing for a change in ownership, either through an initial public offering (IPO) or direct sale, with the agreement of a €1.15 billion ($1.45 billion), 5-year loan facility that will allow it to consolidate existing debt and decrease its interest payments, giving it “greater financial flexibility.”
Avio says it has not drawn down any of the funds available yet but intends “to use the new facility to refinance in full the group’s principal existing indebtedness.”
The company, which is majority-owned by private equity group Carlyle, with Finmeccanica holding a 30% stake, has arranged the loan with a group of banks including Calyon, JP Morgan, Lehman Brothers, Mediobanca and Banca Intesa.
Carlyle, which bought its stake in Avio from Fiat in 2003 for around €1.6 billion, appointed advisors and coordinators in March to prepare for a possible IPO. There has been speculation that Carlyle’s stake could be sold directly to another private equity investor. Cinven and BC Partners, have been cited as possible bidders. Cinven declined to comment, while BC Partners was not immediately available for comment.
Meanwhile, Avio’s first quarter results for 2006 show the company’s earnings before interest, tax, depreciation and amortisation (Ebitda) are up 14.7% year-on-year to €40.9 million, on revenues 13.5% higher at €318 million. Its order book is 20% up year-on-year at €4.3 billion.