28 Aug 20. Avon Rubber wins further US contract . Avon Rubber (AVON) has been awarded a $127m (£96m) dual source contract by the US Department of Defence (DoD) to supply replacement M61 filters for the M50 mask system. Up against the Canadian Commercial Corporation, the group will compete to secure each order of the contract for five years, as well as two potential one-year extension periods. The first order is expected shortly, and delivery would commence in the year to 30 September 2021.
The DoD is Avon Rubber’s largest military customer and the group has been a long-standing supplier of the M50 respiratory mask, spares and accessories. Its exclusive 10-year contract came to an end in 2018, but a five-year sustainment contract was agreed back in June with an initial value of $50m. The group’s newer M69 and M53A1 masks are more likely to be the drivers of earnings growth moving forward on the back of $340m-worth of sole source contracts with the DoD. But there is still the opportunity to harness the DoD’s installed base of over 2m M50 mask systems for a steady stream of revenue.
This latest news follows the announcement of a 10-year contract with the NATO Support and Procurement Agency (NSPA) to supply its FM50 mask systems, powered and supplied air systems and ancillary parts. While Avon Rubber did not disclose how much the contract is worth, it will widen the group’s customer base and is expected to boost earnings for the ‘rest of world’ military segment from next year.
With the dairy arm due to be sold for £180m later this year, Avon Rubber will be focused solely on its higher margin and more predictable protection business. The proceeds of that deal will also provide firepower for further M&A to complement its underlying growth. While there are concerns that defence budgets may be squeezed in a post-Covid world, these recent contract wins suggest Avon Rubber is connected to more resilient areas of spending. Offering investors a defensive haven during these uncertain times, the shares have demonstrated impressive momentum – they are up more than 80 per cent so far this year. That has made for a rather premium valuation at 32 times consensus 2021 earnings. Still, we think the quality and long-term growth potential are worth paying up for. Buy at 3,868p. Last IC View: 3,405p, 02 Jul 2020. (Source: Investors Chronicle)
27 Aug 20. PrecisionHawk Sued for Breach of Contract and Unfair and Deceptive Trade Practices. PrecisionHawk has been sued for nine breaches of contract and for unfair and deceptive trade practices. The lawsuit was filed earlier this month in Wake County, North Carolina Superior Court by the law firm of Thomas K. Lindgren, on behalf of the plaintiffs, JP Business Group and Terravative.
An overview of the lawsuit:
- PrecisionHawk acquired Terraserver.com and other assets from the plaintiffs in 2015 under an agreement which required PrecisionHawk to use best efforts to generate and pay commissions to the plaintiffs for six years on the sales of commissionable products and services through Terraserver.com and all other PrecisionHawk sales channels.
- The commissionable products and services were defined in the agreement to include any and all products and services that utilized satellite data in any manner and also included products and services that utilized terrain data, elevation data, digital terrain models, and digital surface models.
- The plaintiffs allege, among other things, that PrecisionHawk deliberately misclassified sales data, under reported, and under paid commissions, neglected their obligations to market and sell certain commissionable products, and withheld information to conceal their breaches of contract.
JP Business Group’s managing partner, James Burns, released the following statement:
“It’s disappointing and frustrating anytime a business fails to follow through on their promises, but even more so with PrecisionHawk as they had an exceptional founding team that I believed in and trusted to follow through on the promises they made. Unfortunately, the founding CEO was replaced within months after our deal and PrecisionHawk is now on its 4th CEO in the last five years.
We tried for more than 6 months to resolve the issues directly with PrecisionHawk but were unable to reach a resolution which has forced us to file this lawsuit.
I am hopeful that PrecisionHawk will now dedicate proper time and attention to this matter so that we can reach an amicable resolution and avoid a multiple-year court battle, but we are willing and prepared to go to trial as needed to obtain a fair outcome.” (Source: UAS VISION)
27 Aug 20. ADPma Acquired by Mollenhour Gross. ADPma, LLC, an aerospace parts company located in Piney Flats, TN, today announced the next chapter in its history. Owners Rick Rathbun, David Blythe, and Rick Wedgeworth have sold the business to the Knoxville-based investment firm, Mollenhour Gross.
“We’ve built ADPma with a unique engineering and customer-centric DNA and have grappled in the past with how that legacy might endure a change of ownership,” said Rathbun. “But there was something special about the Mollenhour Gross team. We ‘clicked’ immediately. Myself, David, and Wedge couldn’t be more excited for our employees, our customers, and our industry, to have ADPma join the Mollenhour Gross family.”
Rathbun believes Mollenhour Gross’s resources, structure, and approach will allow ADPma to sustainably grow its product development pipeline and customer base: “We believe their patient capital and decentralized approach will allow us to do more of what we do best – develop world-class aerospace parts for world-class manufacturers, carriers, and MROs.”
Mollenhour Gross is excited to be the steward of the ADPma legacy.
“We’re thrilled and humbled to be entrusted with ADPma and everything it means to its team, customers, suppliers, and the industry,” said Dustin Gross, a co-founder of Mollenhour Gross. His partner, Jordan Mollenhour, added: “We have so much respect for entrepreneurs like Rick, David, and Wedge, and for what the aviation industry represents in our country and our society. We know the industry is hurting right now, but aerospace has been at the core to human progress for the last 100+ years, and it will be here for a long time to come. Our goal is to give ADPma a stable home with access to reliable capital, where we can combine some of our resources and long-term perspective, with the existing team’s design engineering, and industry expertise, to support their customers’ goals for decades to come.”
Rathbun, Blythe, and Wedgeworth will stay on board to continue running the company, but they are also excited about the prospect of adding to their roster. According to Wedgeworth: “We have a great team of engineers committed to solving our customers’ hardest problems. But of course, we want to get better and do more.” Blythe added: “There are still more customer problems to solve, and to reach our goals, we need more of the best and the brightest on our team. It’s a special opportunity for the right kind of leaders – entrepreneurial, curious, disciplined, and honest.”
ADPma is a leading design, engineering, and manufacturing company specializing in aerospace OEM and PMA aftermarket parts and components. ADPma was formed in 2001 by a small faculty of engineers representing decades of experience in the disciplines of design, engineering, quality, and manufacturing. Lean and adaptive, ADPma’s mission is to deliver innovative and high-value solutions to airline operators, maintenance service providers, and OEMs globally. For more information, visit http://www.adpma.com/
About Mollenhour Gross
Established in 2004, Mollenhour Gross is a private holding company with permanent capital based in Knoxville, TN. Its decentralized and autonomous portfolio companies are engaged in a variety of industries, including online retail, hospitality, e-commerce fulfillment, real estate, software, and more. For more information, visit https://www.mollenhourgross.com/ (Source: PR Newswire)
27 Aug 20. Rolls-Royce to sell assets to boost pandemic-hit finances. British aero-engine maker Rolls-Royce (RR.L) said it would sell assets to try to raise at least 2bn pounds ($2.6n) as it battles to shore up a balance sheet ravaged by the COVID-19 pandemic and slump in travel.
Rolls-Royce plunged to a record loss before tax of 5.4bn pounds ($7.14bn) in the first half of 2020 and, compounding its woes, finance chief Stephen Daintith resigned, although said he would stay for a transition period.
The company said it would continue to look at options to bolster its finances even after asset sales. But asked about a possible rights issue, Daintith said Rolls-Royce had a good level of liquidity and a plan to cut costs.
“We’re not going to be drawn on any particular option for strengthening the balance sheet. We’re taking our time, considering carefully,” he told reporters on Thursday.
JP Morgan analysts said a rights issue was needed: “In our view only a very major capital raise would put Rolls-Royce on a sound footing.”
Rolls-Royce shares dropped 9% in early trading. The stock is down 66% this year, giving it a market capitalisation of 4.54bn pounds.
As the company is an important supplier to the UK government on military programmes, there has been media speculation that Britain could be forced to rescue it.
“Probably the most important thing that government can do is help get people flying again,” CEO Warren East said, when asked about potential state help.
Planes stopped flying for months in coronavirus lockdowns earlier this year and travel remains at a much lower level than before the pandemic, hitting Rolls-Royce as airlines pay it based on how many hours engines fly.
Flying hours were down 70-75% in May, June and July, and the company warned of considerable uncertainty over the timing and shape of a recovery.
To boost its coffers, Rolls-Royce said it planned to sell ITP Aero, which is based in Spain and makes turbine blades for jet engines, and other assets to raise at least 2bn pounds over the next 18 months.
The group will also consolidate its aerospace manufacturing facilities into six locations from 11, and said 4,000 job cuts had already been made at its civil aerospace unit of the 9,000 announced in May – part of this year’s 1bn pound cost cutting plan. Daintith is set to move to retail technology firm Ocado (OCDO.L) and Rolls-Royce said the search for a successor was underway. ($1 = 0.7573 pounds) (Source: Reuters)
28 Aug 20. Composites manufacturer Quickstep Holdings grew sales, margins and profits in the 2020 financial year as all key production contracts in defence and aerospace achieved growth.
The Bankstown, Sydney-based company booked earnings before interest and tax (EBIT) of $4.6 million on sales up 12 per cent for the year to $82.3 million.
Sales margins rose 25 per cent to 10.1 per cent.
During the year Quickstep saw substantial growth in its contracts to make parts for the tails of the F-35 Lightning joint strike fighter, the C-130 Hercules wing flaps and its new Geelong site saw its first commercial business.
Geelong is supplying parts for Micro-X’s Nano portable X-ray machines and for Lockelec train ramps.
Work with Boeing on F-15, F/A-18 and AV-8B Harrier aircraft expanded.
The company invested $6 million funded by bank debt and grants of $400,000 on new equipment and facilities, including for MJU-68 aircraft flare housings which are a new product for the company in association with Chemring Australia.
Some grants came from the US Department of Defence to establish a reliable second source of parts.
Part of the investment went to process improvements, new production technologies and efficiency measures.
The company announced a new aerospace development programme underway with Spirit Aerosystems and a second programme with an as yet un-disclosed OEM manufacturer.
Quickstep sees opportunities in announced greater spending by Australia on unmanned aircraft, guided weapons and maintenance.
It expects growth in revenues of five to 10 per cent in the year ahead without any new contract wins. (Source: Google/https://www.aumanufacturing.com.au/)
27 Aug 20. Indian Govt to disinvest 15% stake in HAL through Offer For Sale. Through the OFS, the government proposes to sell 33,438,750 shares constituting 10 per cent of the paid-up share capital.
The Indian government is going to sell 15 per cent of its equity stake in the state-owned aerospace and defence company Hindustan Aeronautics Ltd. (HAL) via an Offer For Sale (OFS) at a floor price of Rs 1,001 per share. The government is expected to raise about Rs 5,000 crore from the sale offer on August 27-28.
An IANS report quoted a company official as saying, “The Defence Ministry has notified the stock exchanges in the evening on selling 15 per cent of its equity stake (5.01-crore shares) in the company at Rs 1,001 per share of Rs 10 face value through OFS.”
Through the OFS, the government proposes to sell 33,438,750 shares constituting 10 per cent of the paid-up share capital, with an option to sell an additional 5 per cent stake or 16,719,375 shares as an oversubscription option.
“About 20 per cent of the offer size will be reserved for retail investors and 25 per cent for mutual funds. Retail investors will be allocated offer shares at a discount of 5 per cent to the cut-off price in accordance with the OFS guidelines,” added the filing.
The sale price of Rs 1,001 per share is a 15 per cent discount of the scrip’s Wednesday’s closing price of Rs 1,177.75 on the BSE.
As the government holds majority equity (89.97 per cent) stake in the listed firm, it can offload a part of the stake by selling its shares on an exchange platform.
“The OFS will take place on a separate window of the stock exchanges (BSE and NSE) on August 27-28 to institutional and retail investors,” said the filing.
IDBI Capital Markets & Securities, SBICAP and YES Securities (India) will be the settlement brokers for the offer. (Source: Google/https://www.thestatesman.com/)
27 Aug 20. Rolls-Royce seeks to raise £2bn after Covid triggers heavy losses. UK engineering group includes division that makes parts for Eurofighter Typhoon in asset sale plans. Rolls-Royce has taken a big hit from the grounding of flights due to Covid-19 because it gets paid according to hours flown by aircraft fitted with its engines. Rolls-Royce will seek to raise at least £2bn by selling assets including a division that makes parts for the Eurofighter Typhoon, after the coronavirus crisis dragged the UK’s premier engineering group into heavy half-year losses. The FTSE 100 group, whose shares are down two-thirds this year, has taken a big financial hit from the grounding of flights due to Covid-19, since it gets paid according to the hours flown by aircraft fitted with its engines. Warren East, chief executive, said on Thursday that the company was continuing to examine options for strengthening Rolls-Royce’s balance sheet, as the extent of the damage was revealed. The company sank into a £5.4bn pre-tax loss during the six months ended June 30, a figure that included impairment charges and write-off, restructuring costs and a £2.6bn non-cash revaluation of currency hedging contracts. Revenues dropped a quarter to £5.8bn and at an underlying level the operating loss was £1.7bn. The company burnt through £2.8bn of cash in the period, as large engine flying hours were almost cut in half, and management expects a further outflow of £1bn in the second half of 2020. In an attempt to survive the collapse in global aircraft demand, the company is undertaking a deep restructuring that involves axing 9,000 jobs — almost one in every five of its total workforce. (Source: FT.com)
26 Aug 20. kSARIA Acquires Compulink Cable Assemblies.Second Acquisition Under Behrman Capital’s Ownership Builds on Momentum by Expanding Solutions OfferingkSARIA Corporation (“kSARIA” or the “Company”), a leading producer and supplier of mission-critical connectivity solutions for the aerospace and defense end markets and a portfolio company of Behrman Capital, today announced that it has acquired Compulink Cable Assemblies Inc. (“Compulink”). Financial terms of the transaction were not disclosed.
Headquartered in St. Petersburg, Florida, Compulink is an AS9100-registered manufacturer of high-reliability cables and harnesses for commercial and military applications. Since 1984, Compulink has served original equipment manufacturers nationwide with excellence in design engineering, prototype fabrication, production, and testing. The Company’s product capabilities include an array of harness assemblies such as coax, RF, Mil-C-38999 and miniaturized connectors, as well as custom-molded cable assemblies for virtually any application in the military, medical, and transportation marketplaces.
Anthony J. Christopher, kSARIA’s President and Chief Executive Officer, said: “Acquiring Compulink further enhances our connectivity solutions offering, following our successful integration of CIA&D late last year. Compulink’s formidable presence in battlefield and ground-based applications, as well as other defense and commercial applications, complements kSARIA’s strength in aerospace and naval solutions. Together, we will have expanded production and engineering capabilities, as well as access to new end markets that enable exciting growth opportunities.”
Grant Behrman, Managing Partner of Behrman Capital, said: “We are pleased that kSARIA is building on its recent success with its second acquisition since our investment in 2018. The Company has continued to deliver strong performance and has rapidly expanded its platform in the high-reliability optical and connectivity sector. The acquisition of Compulink accelerates this momentum, and we look forward to continuing to support kSARIA as it implements its organic and acquisition growth strategy.”
Rob Wilkin, co-founder of Compulink, said: “Compulink has a 36-year history of manufacturing excellence and providing innovative solutions for our customers. We have extensive industry expertise that has enabled us to forge deep-rooted and invaluable relationships with major OEMs and manufacturers. We are excited to contribute to the success of kSARIA in partnership with the management team and Behrman Capital.”
Steve Shevlin, co-founder of Compulink, added: “We’re delighted to join forces with kSARIA. Compulink has grown to become the industry leader it is today through its customer-centric business approach and unmatched expertise in manufacturing and engineering. This transaction is a unique strategic opportunity to build on our deeply successful foundation and deliver enhanced value to our customers.”
kSARIA, based in Methuen, Massachusetts, offers complete interconnect solutions for mission critical applications with unsurpassed quality and performance. kSARIA offers unmatched advantages for all aspects of Mil/Aero connectivity solutions from cable assembly design, fabrication, installation, training, and logistics management. Whether it is optical fiber, copper, RF or hybrid cable assemblies, kSARIA has the technology, expertise, and an end-to-end approach to optimize solutions for customers. More at www.ksaria.com (Source: PR Newswire)
26 Aug 20. Aero Services Global’s acquisition plans. A £43m-turnover supplier to the aerospace sector has outlined plans to expand with a further acquisition. Aero Services Global’s managing director also spoke to Insider about the challenges faced during the pandemic and why the company is now eyeing up the defence and medical sectors.
Manchester-based AS.G manufactures and sub-assembles detailed airframe structural equipment for more than 20 primes and tier ones.
It recently secured a £31m funding package from Magnetar Capital and Close Brothers Invoice Finance to support a three-year expansion, and later bought Wirral-based AMF Precision Engineering.
Its portfolio of companies also comprises Queens Award-winning Arrowsmith Engineering, B&H Precision Tooling, Datum, Ludolph, Phoenix CNC Engineering and TGM.
Simon Weston, AS.G managing director, spoke to Insider about navigating the pandemic, noting that it had been “a difficult time for every member” of the group.
“With aerospace being hit dramatically, we have had to look at ways where we can temporarily restructure some companies to make sure liquidity is still there and we are in a good position to move forward when the economy hopefully picks up,” he added.
“At the heart of our approach has been ‘Respond, Recovery and Thrive’, a group-wide strategy introduced in the early days of the pandemic and designed to give us a collective pathway out of Covid-19.”
AS.G also took full advantage of the furlough scheme, with about a third of its 370-strong workforce put on job retention.
“There has always been the belief that we need to continue to invest and make sure we have a platform to attack new opportunities that might arise from our competitors sadly falling by the wayside or new pockets of work in traditional industries or potential ones, such as automotive, defence and medical,” he said
“M&A activity has continued with the acquisition of AMF Precision Engineering, which we were all really pleased about as it offers us direct access into a new market and significant long-bed CNC machining capabilities.
“We’re currently in discussions with three more companies who fit the strategic direction of where we want AS.G go. I doubt all of them will complete this year, but I’m confident we should get another one over the line.”
Looking backing on the past few months, Weston noted that while there are “always things you might do differently with hindsight, I’m genuinely pleased at the way we have implemented our business response to Covid-19”.
“We made some tough decisions early, accessed government support where we needed it and explored new sales avenues that could replace some of the anticipated drops in volume.
“I think what has been important is our desire to not stand still.”
AS.G is now looking at opportunities in the defence and medical industries sectors.
“Defence is a natural fit and we’ve already had some early contract wins on new packages of work that give us a footprint in this market,” said Weston. “This will hopefully continue as we talk to more of the main primes.
“Medical, again a high precision field, suits the value-added engineering services we offer. We believe we can take some of the outstanding aerospace manufacturing techniques we’ve perfected and deliver them to customers in this industry.”
With regard to what would be a successful year for AS.G, Weston told Insider: “Given everything we’ve had to contend with, I would be delighted with the group breaking even and keeping our central reserves intact and ready to be proactive when the upturn arrives.
“Everything is pointing in that direction; we just need to ensure we continue our focus and delivery to our customers.
“What will be crucial to our future success is retaining as many highly skilled engineers as possible. We have to protect our workforce so that they can really drive our growth in 2021.” (Source: Google/https://www.insidermedia.com/)
25 Aug 20. MS Tech Ltd. – a global developer, manufacturer, and innovator of nanotechnology, IoT and big-data sensors – expands its worldwide presence with the establishment of MS Tech Innovation Private Limited, a fully owned subsidiary by MS Tech Ltd. The company will aim to the Indian government and Indian PM Narendra Modi vision of “Aatmanirbhar Bharat” which is “Self-Reliant India”. MS Tech Innovation will deepen the its manufacturing, assembly, sales, marketing and technical support activities across India in support of the growing demand for advanced explosives and narcotics detection systems.
According to Doron Shalom, CEO of MS Tech Ltd, “The ongoing process of establishment of the subsidiary in India is a result of our understanding of the need for local representation and is another step in strengthening our support and commitment to our customers in the Indian market. We are looking forward to our continued cooperation with India while supporting the vision of raising its manufacturing capacity, creativity, skills and employment.”
Mr. Shalom adds that “MS Tech’s explosive and narcotics detection solutions are already successfully deployed in dozens of international and domestics airports across India. The Make-In-India activities will enable us to expand our capabilities for further projects in the aviation, defense and security sectors and keep our efficient and fast service and support to our Indian customers.
The Company’s Flagship Products Are the EXPLOSCAN and DUOSCAN:
The EXPLOSCAN and DUOSCAN are explosive and narcotics trace and vapors detectors that use the innovative High-Frequency Quartz Crystal Microbalance “HF-QCM” nanotechnology sensors developed, manufactured and patented by MS Tech Ltd. Both systems feature an innovative design with self-calibrating and self-cleaning capabilities, with the highest levels of operational availability. The HF-QCM nanotechnology sensors are non-radioactive, providing a complete green and safe working environment.
The EXPLOSCAN and DUOSCAN are ideal for aviation and transportation security, high-threat facilities and infrastructures, military, customs and border control, mail inspection and cargo screening markets. The systems are operational proven in in a wide spectrum of temperatures and withstand even the harshest environmental conditions including, dust and humidity.
About MS Tech Ltd.:
MS Tech is a global developer, manufacturer and innovator of nanotechnology detection and diagnostics sensors. MS Tech’s technologies are based on its award winning and patented sensors, which represent a scientific breakthrough in the detection and identification of materials in gas, vapor and liquid phases. With over 22 years of history in analytical chemistry and technology experience, MS Tech’s innovative sensor technologies are environmentally friendly with widespread applications in several market sectors, including food safety & product inspection, homeland security & defense, bio-medical diagnostics, fire & smoke detection, water & air monitoring and aerospace. MS Tech develops, manufactures and supplies customized detection sensors and integrated solutions to its affiliate companies and other industrial OEMs and resellers.
MS Tech invites inquiries about the application of its sensor technologies for the development of new products through strategic and commercial partnerships.
25 Aug 20. AirMap’s New Business Unit, AirMap Defense Group, Supplying Mission-Critical Technologies to the US Department of Defense. AirMap, the leading digital airspace and automation company serving the drone economy, has established the AirMap Defense Group (ADG), a new business unit providing mission-critical technologies to the defense and security markets.
AirMap Defense Group creates dual-use technologies for commercial and national defense use. It is responsible for AirMap’s DoD projects, including the AirMap AirBoss platform, which provides a tactical intelligence surveillance and reconnaissance (ISR) solution for small quadcopters.
“Using American-built technologies, ADG tailors AirMap’s innovative commercial systems for the public sector, with a focus on improving critical DoD operations,” said Larry Berkin, AirMap’s Executive Vice President of Business and Corporate Development and GM of the AirMap Defense Group.
AirMap has formed the ADG Advisory Council to provide strategic guidance to the new unit. Founding members of the Advisory Council are:
- General Robert B. Neller (Retired), who served as the 37th Commandant of the Marine Corps and commanded Platoon through Service HQs as a career Infantry Officer.
- Major General George B. Harrison (Retired), former commander of the Air Force Operational Test and Evaluation Center at Kirtland Air Force Base.
- Colonel Edward G. “Edge” Gibbons (Retired), former US Army Infantry Officer who served in the 82nd Airborne Division, the 4th Infantry Division (Mechanized), and the 3rd Infantry Division (Mechanized).
“I am honored to welcome this esteemed group of distinguished veterans to our advisory council,” said Larry Berkin. “They bring extensive knowledge that will guide ADG’s strategic direction.”
About AirMap Defense Group
AirMap Defense Group (ADG) is AirMap’s defense & security business unit focused on providing mission-critical technologies to the US Department of Defense. Adopting innovative drone services is crucial to maintaining the U.S. military’s technological advantage. ADG provides secure, scalable, and cost-effective solutions that help government agencies fill technology gaps, drive efficiencies, and perform essential operations. To learn more, visit airmap.com/defense. (Source: BUSINESS WIRE)
21 Aug 20. Curtiss-Wright Discloses Possible Russia Sanctions Violations. Curtiss-Wright Corp. may have violated U.S. sanctions on Russia after a blacklisted company acquired two of its longstanding customers, according to a securities filing by the manufacturer. Davidson, N.C.-based Curtiss-Wright disclosed the potential breach in a filing this week with the U.S. Securities and Exchange Commission. The company, which makes components and provides products and services to the defense, aerospace and industrial sectors, said in the disclosure that it notified sanctions authorities and retained outside counsel to investigate. The disclosure was made as a part of the successful issuance and sale of $300m in senior notes, which the company said it expected to use for general corporate purposes. The potential sanctions violation is immaterial to the corporation, a Curtiss-Wright representative said. The acquisition of the unnamed customers, which occurred some time in 2019, happened without the knowledge of Curtiss-Wright, the company said in its filing. Curtiss-Wright said it voluntarily disclosed the matter in January to the U.S. Treasury Department’s Office of Foreign Asset Controls, which enforces U.S. sanctions. (Source: glstrade.com/WSJ)
19 Aug 20. Speedcast Receives Equity Commitment To Complete Recapitalization. Speedcast International Limited (ASX: SDA) has received a US$395m equity commitment from Centerbridge Partners, L.P. and its affiliates, one of its largest lenders — the commitment would support a plan of reorganization, which has the support of both Centerbridge and the Company’s Official Committee of Unsecured Creditors. Centerbridge’s proposed US$395m equity investment provides the opportunity for Speedcast’s existing secured lenders to participate in the equity commitment on a fully pro-rata basis to support Speedcast’s emergence from its reorganization under Chapter 11 of the US Bankruptcy Code. During the completion of the Chapter 11 process and under the new ownership structure, Speedcast remains focused on supporting the connectivity needs of its customers and fully intends to continue its global operations uninterrupted.
The proposed plan would enable the Company, under the leadership of both Peter Shaper, Speedcast’s CEO, and Joe Spytek, Speedcast’s President and CCO, to continue to execute on the transformation plan to refocus the business, which they initiated earlier this year after joining the organization in executive leadership roles. Both Shaper and Spytek have extensive background in the communications and service provider sectors, each previously serving as chief executives for leading remote communications businesses.
Centerbridge has also committed to providing, if needed, debtor-in-possession (DIP) financing of up to US$220m on favorable economic terms. The Centerbridge DIP financing, if drawn, would be utilized to refinance the Company’s existing DIP financing, to fund the Company’s Chapter 11 plan process, and to ensure the Company can continue to meet its financial commitments while it works toward confirmation of the plan of reorganization.
The plan will provide for cash payments to holders of secured claims. A number of the company’s trade creditors are critical to its future, and the plan will provide to those relevant trade creditors, a partial cash payment for those unsecured claims. Unsecured creditors generally will share in recoveries from a litigation trust, noting there is no certainty that any action would be undertaken or payment made from this trust. The plan does not contemplate any recovery for existing shareholders, and existing shareholders would no longer have an equity interest in the reorganized Speedcast Group.
Completion of the equity investment is subject to confirmation of the plan of reorganization and a number of other conditions, including various regulatory approvals and waivers.
Speedcast announced its decision to recapitalize its business through voluntary Chapter 11 proceedings on April 23, 2020. More information about Speedcast’s Chapter 11 case can be found at this direct infolink…
Speedcast is advised by Weil, Gotshal & Manges LLP as global legal counsel and Herbert Smith Freehills as co-counsel. Michael Healy of FTI Consulting, Inc. is Speedcast’s Chief Restructuring Officer, and FTI Consulting, Inc. is Speedcast’s financial and operational advisor. Moelis Australia Advisory Pty Ltd and Moelis & Company LLC are Speedcast’s investment bankers. KCC is Speedcast’s claims and noticing agent. Centerbridge is advised by Wachtell, Lipton, Rosen & Katz. The Committee is advised by Hogan Lovells US LLP and Husch Blackwell LLP as legal counsel and Berkeley Research Group, LLC as financial advisor. (Source: Satnews)