Ultra Electronics Holdings PLC Response to recent press speculation (0789J)

TIDMULE

RNS Number : 0789J

Ultra Electronics Holdings PLC

26 June 2017

24 June 2017

THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

Ultra Electronics Holdings plc

Response to recent press speculation

Ultra Electronics Holdings plc ("Ultra" or the "Group") notes the recent speculation.

Ultra can confirm it is in advanced discussions to acquire the whole of the issued share capital of New York Stock Exchange listed Sparton Corporation ("Sparton") (Ticker: SPA). Sparton's Engineered Components & Products ("ECP") division is Ultra's 50/50 partner in the long-standing ERAPSCO joint venture. Should Ultra acquire Sparton, it intends to sell Sparton's other business, the Manufacturing & Design Services ("MDS") division. In 2014, ERAPSCO was awarded an indefinite delivery indefinite quantity contract by the US Navy which runs until 2019; US$664m of purchase orders have been received in the first four years and a further $160m of purchase orders are expected to be added in FY18.

Ultra's participation in the ERAPSCO joint venture has brought an extensive knowledge, experience and proven performance to a major customer, the US DoD. Ultra is in a unique position to "preserve the status quo" for the US Navy and help to ensure that the delivery of critical assets to this major customer is not interrupted.

The principal reasons for Ultra pursuing the proposed acquisition of Sparton include:

-- The ECP Division of Sparton is an excellent strategic fit with Ultra's existing activities in a market segment in which the Group has extensive experience and well established customers

   --      Enhances Ultra's continuing relationship with a major customer 
   --      Increases exposure to the growing sonobuoy segment 
   --      Attractive financial returns for Ultra 
   --      Allows Ultra to secure an important revenue and earnings stream 

The Directors of Ultra intend to maintain a prudent funding structure for the Group and have a medium-term target range for a net debt to EBITDA ratio of below 1.5x. The acquisition, if agreed, is expected to be funded by Ultra's existing debt facilities and an equity placing of new shares representing up to 9.99 per cent. of Ultra's existing ordinary share capital.

The acquisition of Sparton and the disposal of MDS, if completed, are not expected to alter Ultra's objective of returning to a through-cycle target of 85% cash conversion in the medium term.

The acquisition of Sparton by Ultra would be subject to certain conditions including, inter alia, Ultra receiving certain approvals including from relevant regulators and antitrust authorities as well as approvals from both Sparton and Ultra shareholders.

A further announcement regarding Ultra's potential interest in Sparton will be made if and when appropriate.

Ultra released a pre-close statement on 22 June 2017.

For further information contact:

 
 Ultra Electronics Holdings 
  plc                                [phone] 
 Rakesh Sharma, Chief Executive 
 Amitabh Sharma, Group Finance 
  Director 
  Susan McErlain, Group Corporate 
  Affairs Director 
  (Mob: [phone]) 
 
   Investec Bank plc 
   Christopher Baird 
   Keith Anderson                      [phone] 
 MHP Communications                  [phone] 
 James White 
 

Notes to Editors

1. Further information about Ultra:

Ultra Electronics is an internationally successful defence, security, transport and energy company with a long track record of development and growth. The Group manages a portfolio of specialist capabilities generating innovative solutions to customer needs. Ultra applies electronic and software technologies in demanding and critical environments ranging from military applications, through safety-critical devices in aircraft, to nuclear controls and sensor measurement. These capabilities have seen the Group's highly-differentiated products contributing to a large number of platforms and programmes.

Ultra has world-leading positions in many of its specialist capabilities and, as an independent, non-threatening partner, is able to support all of the main prime contractors in its sectors. As a result of such positioning, Ultra's systems, equipment or services are often mission or safety-critical to the successful operation of the platform to which they contribute. In turn, this mission-criticality secures Ultra's positions for the long-term which underpins the superior financial performance of the Group.

Ultra offers support to its customers through the design, delivery and support phases of a programme. Ultra businesses have a high degree of operational autonomy where the local management teams are empowered to devise and implement competitive strategies that reflect their expertise in their specific niches. The Group has a small head office and executive team that provide to the individual businesses the same agile, responsive support that they provide to customers, as well as formulating Ultra's overarching, corporate strategy.

Across the Group's three divisions, Ultra operates in the following eight market segments:

   --      Aerospace                                 Land 
   --      Communications                        Maritime 
   --      C2ISR                                       Nuclear 
   --      Infrastructure                             Underwater Warfare 

2. Other information

The information contained within this announcement is deemed by Ultra to constitute inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Ultra is Sharon Harris, Company Secretary and General Counsel.

This announcement may contain "forward-looking statements" with respect to certain of Ultra's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of Ultra, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which Ultra and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on Ultra's profitability and ability to access capital and credit, a decline in Ultra's credit ratings, the effect of operational risks and the loss of key personnel. As a result, the actual future financial condition, performance and results of Ultra may differ materially from the plans, goals and expectations set out in any forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of Ultra speak only as at the date on which they are made. Except as required by applicable law or regulation, Ultra expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in Ultra's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings or earnings per share of Ultra for the current or future years would necessarily match or exceed the historical published earnings or earnings per share of Ultra.

Neither the content of Ultra's website (or any other website) nor the content of any website accessible from hyperlinks on Ultra's website (or any other website) is incorporated into or forms part of this announcement.

Investec Bank plc ("Investec") is authorised by the Prudential Regulatory Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority and is acting exclusively for Ultra and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Ultra for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

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June 26, 2017 02:00 ET (06:00 GMT)