BBA Aviation PLC Ontic disposal completion (8985R)

TIDMBBA

RNS Number : 8985R

BBA Aviation PLC

01 November 2019

1 November 2019

Ontic disposal completion and proposed return of capital

BBA Aviation ("BBA" or "the Group"), a market-leading provider of global aviation support services, is pleased to announce it has completed the disposal of Ontic to CVC Fund Vll having met all regulatory and financial conditions.

The previously announced disposal price of $1,365 million is subject to certain price adjustments including cash and debt-like items at closing, resulting in effective proceeds of $1,321 million. Out of these proceeds, BBA intends to repay $250 million of bank debt, has paid $32 million of USPP make-whole costs, and has agreed to contribute $39 million (being the $ equivalent of GBP30 million) to the BBA Income and Protection Plan, in consideration of the Pension Scheme Trustee releasing the security which it held over certain of Ontic's assets. There will also be further payments with regard to tax and customary transaction fees.

Taking account of these deployments, BBA is planning to return $835 million to shareholders, an amount which is near to the top end of the guided range when the transaction was announced on 30 July 2019. The reduction in net debt is intended to ensure a strong balance sheet is maintained and to position the Group near the lower end of the stated targeted range of net debt to underlying adjusted EBITDA of 2.5 to 3.0 times on a covenant basis at 31 December 2019.

The Board has approved a return to shareholders of 80.71 cents per existing ordinary share as a special dividend, equivalent to approximately 21% of the ordinary share price at close of business on 31 October 2019. The special dividend will be paid on 13 December 2019 to shareholders who are on the register at the close of business on 22 November 2019. In order to maintain the comparability of the Group's share price and per-share metrics before and after the special dividend, the Group plans to undertake a share consolidation. The share consolidation will replace every 5 existing ordinary shares with 4 new ordinary shares.

Following completion of the Ontic disposal and given the on-going process to dispose of the ERO business, it is expected that the Group will from that point comprise predominantly the market-leading Signature business. This will enable enhanced focus on Signature, which the Board believes to be a significant source of future shareholder value creation. The Board has therefore elected to change the Company's name to "Signature Aviation plc" which will better align it with the Company's most significant brand in its core market. In addition, it will create a stronger and clearer connection of the brand to shareholders and other stakeholders.

It is intended that the change of name will come into effect on or around 25 November 2019. The intended effective date of the change of name has been chosen to align as closely as possible with the start of trading of the new ordinary shares, post the share consolidation.

The Company's ticker will change to "SIG" and the Company's current ISIN and SEDOL will change due to the share consolidation and the issuance of the new ordinary shares. The Company's shares will remain listed on the London Stock Exchange and the Company will remain a member of the FTSE 250. The Company's website will change to www.signatureaviation.com. All of these changes will be effective as soon as practically possible after the change of name has been implemented.

Signature's free cash generative characteristics should allow it to sustain a progressive dividend policy and the potential for ongoing returns of capital, surplus to the investment requirements of the Signature business, while maintaining a strong balance sheet within the target leverage range on a covenant basis. The progressive dividend policy is based on a dividend per share basis and the directors intend to continue following this policy once the proposed share consolidation has been completed, with the dividend per share for the new ordinary shares being progressive relative to the dividend per share for the existing ordinary shares. The Board expects the next payment under this policy to be the final dividend in respect of the 2019 financial year. The policy applies to the annual ordinary dividend and excludes the special dividend of 80.71 cents per share.

The share consolidation is subject to the approval of the Company's shareholders and accordingly the Company has today posted to shareholders a Notice of General Meeting and explanatory circular (the "Circular") to shareholders regarding the share consolidation and related resolutions which will be put to shareholders at the General Meeting.

The General Meeting will be held at 9.00am on Friday 22 November 2019 at the Company's registered office, 105 Wigmore Street, London W1U 1QY.

The Circular and the Notice of General Meeting have been submitted to the National Storage Mechanism located at www.morningstar.co.uk/uk/nsm.

The Circular and the Notice of General Meeting can also be viewed at or downloaded from the Company's website at www.bbaaviation.com/investors.

Shareholders will receive the Special Dividend in pounds sterling unless they complete and submit to the Company's registrars an election form stating their wish to receive their dividends in US dollars. The pounds sterling dividend payment will be converted from US dollars at a prevailing exchange rate during the period commencing 23 November 2019 and ending 1 December 2019. Shareholders will be notified of the exchange rate determined through an RNS announcement on 2 December 2019. Existing currency elections for final and interim dividends paid by the Company apply to the Special Dividend.

The Company has taken the decision that its Dividend Reinvestment Plan will not apply to payment of the Special Dividend, in accordance with the terms and conditions of the Dividend Reinvestment Plan.

Timetable

 
 Publication of circular and reference price    1 November 2019 
  for share consolidation 
 General Meeting                               22 November 2019 
 Record date for entitlement to the special    22 November 2019 
  dividend 
 Ex-dividend date for the special dividend     25 November 2019 
 Special dividend payment date                 13 December 2019 
 

Notes:

The Group will publish a trading update for the year to 31 October 2019 on 13 November 2019.

Enquiries:

BBA Aviation plc

David Crook, Group Finance Director

Kate Moy, Head of Investor Relations and Communications

[phone]

Tulchan Communications

David Allchurch

[phone]

Information on BBA Aviation plc

BBA Aviation plc is a market leading, global aviation support and aftermarket services provider, primarily focused on servicing the Business and General Aviation (B&GA) market. We support our customers through our principal business Signature and Global Engine Services/Engine Repair and Overhaul (ERO).

Signature, including Signature FBO, TECHNICAir(TM) and EPIC Fuels, provides premium, full-service flight and home base support including refuelling, ground handling and MRO services through the world's largest fixed base operation (FBO) network for B&GA users with around 200 locations covering key destinations in North America, Europe, South America, Caribbean, Africa and Asia. EPIC Fuels is a provider of aviation fuels, supplies and services operating at more than 200 locations.

On 1 March 2018 BBA Aviation announced that it was conducting a strategic review of the ERO business and, at the end of May 2018, management committed to a plan to sell substantially all of the business and the relevant assets and liabilities were classified as held for sale. The sale process is ongoing.

For more information, please visit www.bbaaviation.com

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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November 01, 2019 03:00 ET (07:00 GMT)