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Aviation History
1994
1994 - 2514.PDF
Re-focused Lucas to sell non-core US businesses KEVIN O'TOOLE/LONDON LUCAS AEROSPACE has unveiled plans to sell its US communications and aircraft modification operations as part of wider moves to re-focus the com pany around its core control sys tems businesses. Interest has been shown by po tential buyers, says Lucas Aerospace managing director Frank Turner, and he hopes to put the bulk of the disposals in hand over the next year. Together, the businesses turn over around £45 million. Most of the sales will come from the break-up of the Lucas Communications and Electronics division. It was built up during a spell of US acquisitions in the late 1980s when Lucas purchased the AUL, Epsco, Weinshcel and Zeta units. All will now be sold. The division, which employs over 500 people, supplies microwave- and radio-frequency electronics equipment mainly to military customers. With the defence downturn, efforts had been made to diversify into new commercial markets beyond aero space and Turner says that the time had come for Lucas to sell. The Lucas Aviation aircraft modification operation, which employs 50 staff at its base in Santa Maria, California, is also on the dis posals list. Turner says that three US companies have expressed an interest in taking the plant. The sis ter maintenance centre at Santa Barbara was closed a year ago with the loss of around 380 jobs. This latest round of re-struc turing follows the arrival of George Simpson as chief execu tive of the parent Lucas Industries group. Since arriving from British Aerospace in April, Simpson has conducted a sweeping strategic review aimed at re-focusing the group around "high-integrity sys tems" businesses in its core auto motive and aerospace markets. "Implementation of this strate gy implies a combination of acqui sition, divestment and alliance activity to re-balance the portfo lio," says Simpson, revealing the group's new direction on 10 October, as Lucas announced its year-end results. Simpson says that Lucas will look at "improving the critical mass" of its aerospace business as markets begin to recover over the next two years. Turner adds: "We will look for opportunities for acquisitions, but we won't be the people who rush to make the wrong deal." Lucas Aerospace will now focus on three core product lines in flight controls, engine controls and electrical power systems, alongside a product-support divi sion. A previous round of re structuring over the last two years has already seen the sale of several smaller operations and the igni tion systems business will follow, once patent problems have been resolved, says Turner. Meanwhile, rationalisation will also continue within the remain ing businesses. Turner identifies the flight-controls operations in Turner: acquisitions may follow the USA and France as targets, although plant closures are not on the agenda. "If you take the loss-makers away from aerospace, then it's a very profitable business," Turner points out. For the year to the end of July, aerospace operating profits remained at £30.7 million, despite an underlying 7% fall in sales, which ended the year at £5 3 7 mil lion, after £55 million of divest ments were taken into account . The division's final profit figure was dragged down, however, after taking a charge of £16.4 million to write down the value of excess spare parts holdings and £1.1 mil lion to cover re-structuring. Lucas Industries also set aside another £87.6 million at group level to cover re-structuring and the likely cost of contract claims against Lucas Western by the US Defense Department. The unit has now resumed full deliveries. • SAe finds buyer for manufacturing units SINGAPORE AEROSPACE (SAe) has gone ahead with the sale of its loss-making manufactur ing subsidiaries, SA Manufacturing (SAM) and California Avi-Tron (CAT), to associate company Sin gapore Technologies Ventures The manufacturing operations have proved a drag on the perfor mance of SAe's maintenance busi ness and were largely responsible for an 11 % slide in group profits for the first half of this year (Flight International, 5-11 October). The two companies will be acquired by Singapore Technologies Ventures for SS52.7 million ($35.6 million) and incorporated into its precision-engineering division. SAM was established in 1981 to produce military-aircraft engine components and later diversified into supplying civil parts for Western manufacturers. CAT, acquired by SAe in 1991, manu factures sheet-metal aircraft sec tions for Boeing. • BUSINESS Hexcel accepts improved Mutual offer BANKRUPT US materials company Hexcel and its shareholders' committee have accepted an improved financing offer from the Mutual Series investment fund which will form the basis of an agreed re-organisa tion plan to be presented to the bankruptcy court. Mutual Series will act as a standby purchaser in a $50 million rights issue, $41 million of which will be offered to existing share holders and $9 million reserved for Mutual Series. If shareholders take up the offer, they will hold an 89% interest in the re-organised company, Hexcel says. The company has also agreed to sell its electro-magnetically tai lored (EMT) materials business to Northrop Grumman for some $30 million. Low-observable EMT materials are used principally in the Northrop Grumman B-2 bomber. Hexcel will be licensed to use EMT technology commercially. Zl NEWS IN BRIEF • WOODWARD CONSOLIDATES US controls and accessories specialist Woodward Gov ernor is to consolidate four plants and cease manufactur ing operations at two sites by late September 1995 as it moves to reduce overheads and excess capacity. The company also plans to sell its loss-making Bauer Test Equipment business in 1995. At least 290 jobs will be cut and a pre-tax charge of $22- 26 million is expected. • LUFTHANSA INVESTMENT Gevaert, one of Belgium's largest holding companies, has taken a 1% share in Lufthansa as the German flag carrier presses ahead with its privatisation. Gevaert, which is controlled indirectly by the French Paribas banking group, paid around BFrl.4 billion ($44 million). FLIGHT INTERNATIONAL 19 - 25 October 1994 15
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