Sponsored by TCI International Inc.
13 Apr 22. Brightstar Capital Partners to Combine ERC and Oasis Systems to Advance Customer Mission Success in Aerospace, Defense and Cyberspace. Brightstar Capital Partners, today announced that its portfolio company, ERC, LLC, has signed a definitive agreement to combine with Oasis Systems, LLC, to expand and scale advanced engineering, cybersecurity and technology-focused consulting solutions for global aerospace and defense communities. The acquisition is expected to close approximately in the second quarter of 2022. The two companies will join forces around one mission – customer success. By combining expertise in aviation, space, defense and cybersecurity with leading-edge innovations, the companies will bring together complementary capabilities and cultures to serve customers in more than 36 states across the U.S.
Tom Colatosti and Tim Nickerson from Oasis will lead the management of the combined companies. At closing, Colatosti, Chair of Oasis, will be appointed as the Board Chair and CEO of ERC-Oasis, and Nickerson, CEO of Oasis, will serve as Chief Operating Officer of ERC-Oasis. It is expected that corporate management of ERC and Oasis will continue in their current roles and report to Colatosti, with Oasis divisional and ERC program leadership reporting to Nickerson. ERC-Oasis will continue to operate out of both headquarters’ locations in Huntsville, Alabama, and Burlington, Massachusetts.
“This is an exciting step forward for our company to serve in this rapidly evolving industry,” said Colatosti. “Together we will unite our strengths, strong cultures and world-class employees to gain expanded capabilities and resources to deliver full lifecycle solutions that address our customers’ greatest challenges. The ERC-Oasis combination will pull together many capabilities while remaining steadfast to one mindset – the customer’s mission.”
“Our experienced and talented employees across the country are committed to providing the advantages needed to solve our customers’ and the nation’s toughest challenges,” said Stacy Riley, interim CEO of ERC. “We believe our organizations will be stronger together, offering even greater support to our many customers’ missions.”
“Our government continues to need comprehensive and innovative solutions to help support its missions, protect and defend our country, and move the nation forward now and for generations to come,” said Michael Singer, Partner at Brightstar. “We are excited to start a new chapter and see tremendous opportunities for growth by delivering a more robust set of services to better meet customers’ needs and expectations.”
ERC and Oasis share many important characteristics including an entrepreneurial engineering approach, core values, and a commitment to our nation and its future. Their common cultures are built on respect, empowerment and collaboration. Both ERC and Oasis also have a strong performance record of success and a long history of delivering cutting-edge engineering, technology, and specialized services to support our customers’ missions.
Combined, ERC and Oasis will offer differentiated capabilities that deliver advanced, full lifecycle solutions in the areas of:
- Agile Software Development
- Emerging Technologies
- Information Technology
- Mission Support
- Modeling & Simulation
- Research & Development
- Systems Engineering
- Test & Evaluation
ERC was advised by legal counsel Kirkland & Ellis and financial advisor Houlihan Lokey. Rothschild & Co served as the exclusive financial advisor to Oasis, and Sullivan & Cromwell served as legal counsel.
ERC-Oasis will be a leading innovator providing advanced engineering, cybersecurity and technology-focused consulting solutions for one mission – customer success from aerospace to cyberspace. ERC-Oasis will provide entrepreneurial-driven, expert teams to advance innovative solutions for customers such as the U.S. Department of Defense, Federal Aviation Administration, NASA and other high-tech governmental entities on missions of national importance. ERC-Oasis solutions will combine precise engineering, innovative technologies, deep subject-matter expertise, firsthand mission understanding, and long-term customer knowledge to deliver the critical advantage needed to solve critical challenges. ERC-Oasis employees will share a collaborative culture built on commitment, integrity, teamwork, respect, and uncompromising performance, which will enable best-in-class service and solutions for its customers. For more information, go to www.erc.us and www.oasissystems.com.
About Brightstar Capital Partners
Brightstar Capital Partners is a middle market private equity firm focused on investing closely held family, founder or entrepreneur-owned businesses where Brightstar believes it can drive significant value with respect to the management, operations and strategic direction of the business. Brightstar employs an operationally intensive “Us & Us” approach that leverages its extensive experience and relationship network to help companies reach their full potential. For more information, please visit www.brightstarcp.com.
(Source: PR Newswire)
12 Apr 22. Meggitt disposes of piezoelectric ceramic components unit. Aerospace firm Meggitt has disposed of its piezoelectric ceramic components manufacturing unit to CTS Ceramics Denmark A/S for £59.0m in cash, subject to net debt and working capital adjustments. The FTSE 100-listed firm said on Wednesday that the disposal of Meggitt A/S was consistent with its strategy of developing “sustainable and differentiated technologies” for its core end markets in aerospace, defence, and energy. Meggitt A/S had gross assets of £23.0m on 31 December, including goodwill and other intangible assets arising on the original acquisition of the business, and delivered £2.9m in pre-tax profits in the 2021 financial year. Cash proceeds will be paid on completion and be used to pay down debt and for general corporate purposes. (Source: Google/https://www.sharecast.com/)
12 Apr 22. Restructuring a key component of bullish Denel’s turnaround strategy. Restructuring for efficiency, establishing joint ventures, and selling shares are some of the key turnaround strategies Denel is implementing, and which it believes will bring the company back from the brink of collapse. Denel last made a profit, of R395m, in the 2015/16 financial year. Denel was starting to enjoy the fruits of a successful turnaround when it fell victim to state capture. When the captured board was appointed in July 2015, the Group’s performance immediately started to decline, with Denel posting a R189m loss the following year, followed by a R1.053bn loss and then a R1.749bn loss in the 2018/19 financial year. Its loss widened to R1.96bn in the 2019/20 financial year. Due to a lack of progress with the previous turnaround plan initiated in February 2019, Denel launched its 5.Y turnaround strategy, which aims to improve and accelerate the 2019 plan through restructuring into a lean operating model, repurposed for profitability and sustainability. The new business model will see Denel split into Engineering and Maintenance & Manufacturing divisions while unprofitable divisions and entities are exited or transferred.
Interim Denel Group CEO William Hlakoane told defenceWeb in an exclusive interview that restructuring Denel into two divisions from six operating units will save the loss-making Group R240m a year. He explained that these six divisions were working in silos and not sharing resources – there were a lot of duplications and overlaps, and once engineers had finished on a project, they would often stand idle, whilst they could have been used on other projects in other divisions. The new Denel will be leaner and share resources and services, Hlakoane said.
The restructuring process is underway, and the heavy top structure will be trimmed, and some staff retrenched. However, retrenching staff will cost money and this may take some time. Staff will be contracted back as needed – Hlakoane said it does not make sense to have some capabilities on hand 24/7 when they are seldom needed.
Hlakoane is confident that Denel is on a trajectory towards becoming stable. “It might take a bit of time to reach stability but by July we will have dealt with 60% of redundancies and will be focussing on projects that give us value.”
The other key intervention Denel is making is to sell off assets to generate revenue. Selling stakes in Rheinmetall Denel Munition (RDM) and Hensoldt and trimming the property portfolio could bring in R2.5bn, Hlakoane said. The Public Investment Corporation (PIC) has been approached to buy some of Denel’s land while offers will be made soon for RDM shares, and this could bring in between R750m and R1bn. Hlakoane told defenceWeb that Denel is also waiting for final offers for Hensoldt shares, and hopes to conclude the sale around the end of May or June this year.
While exiting successful joint ventures like Hensoldt South Africa and RDM will generate revenue, it is not a decision taken lightly. Hlakoane believes Denel is caught between a rock and a hard place, “like staying in a house that’s about to be repossessed. We don’t want to sell these subsidiaries but we are sitting in a problem where we need money as in yesterday. National Treasury said we are not going to give you money when you are sitting with jewels in your hand.”
Hlakoane said these assets will be disposed of “with a heavy heart” but Denel’s back is against the wall, and cash is urgently needed. This is part of the Department of Public Enterprises’ ‘tough love’ approach, which is demanding that state-owned Denel needs to be able to survive independently and be sustainable.
Another source of independent cash-generation is through the Denel Medical Benefit Trust (DMBT), which a court in February ruled Denel can access. Between R800m and R1bn will be forthcoming from the Trust by the end of May and Denel is “working around the clock” to secure this money. Hlakoane said he is hopeful that this will go towards paying salaries and suppliers, but Denel also has obligations to the South African Revenue Service (SARS), amongst others. The company is hoping to pay its creditors in tranches so that they can all receive something: Denel owes about R1.7bn to staff and suppliers.
Trade union UASA also has its eye on the DMBT and has gone the legal route to accessing the funds, which it hopes will cover Denel’s outstanding wage bill.
Restoring reputational damage
Hlakoane acknowledged that Denel has suffered a lot of reputational damage, especially as it has been in the media for not being able to deliver on projects or pay staff, and has been fighting legal battles in this regard. However, he maintains that there remains a lot of interest in Denel products, including the G5/G6 howitzers and Rooivalk attack helicopter.
Recently answering questions in the National Assembly, President Cyril Ramaphosa said government is commitment to ensure the survival of Denel and that there is still a lot of interest from other countries around the continent in buying military equipment from South Africa, including the Rooivalk helicopter. He said South Africa cannot afford to lose Denel’s manufacturing ability, especially given the current situation in the world where some countries easily resort to conflict.
Hlakoane reiterated that Denel’s order pipeline ‘looks good’ but require a stable Denel in order to deliver on. Although currents orders are not enough to thrive, “the market is very positive on our products.”
One of the solutions to both reputational damage and turning the company around is to form joint ventures, as this doesn’t expose Denel or the prospective buyer to risk. According to Hlakoane, a lot of companies have come forward regarding the aviation and missile businesses “and we are pursuing those,” with opportunities in places like the Middle East and the Americas.
Part of the turnaround process is exploiting Denel’s intellectual property (IP), in conjunction with Armscor, with which Denel is working closely. “Joint ventures are ideal for exposing IP to specific markets.” However, Hlakoane said Denel will be mindful of companies just seeking to acquire its IP and is wary of entities trying to steal it.
Overall, Hlakoane is bullish about Denel’s prospects and said its trajectory looks positive from where he is sitting. “We are still alive…I am quite confident we will survive,” he said. Although the company has “done wrong” in the past, he believes all is not lost and that Denel can indeed be successfully turned around. (Source: https://www.defenceweb.co.za/)
12 Apr 22. £6.3bn deal to sell Meggitt takes a step closer. The £6.3bn deal to sell Meggitt, the Ansty. based manufacturer of components for the power and aerospace industries, has taken a step closer following after it won the backing of the European Commission.
The Commission released a statement yesterday (April 11) saying that the proposed deal met its competition requirements.
The deal to sell Meggitt has been on hold for several months after the UK Government issued a public intervention notice over Parker-Hannifin’s takeover attempt, which was announced last August. Then, the takeover came with some caveats tied in because of the sensitive work Meggitt undertakes for the UK Government. Parker outlined a series of commitments, including ensuring that the majority of board directors of Meggitt will be UK nationals, keeping Meggitts headquarters in Ansty and retaining current numbers of staff and R&D spend.
The Government’s intervention meant that the Competition and Markets Authority would look if the deal presented a risk to national security.
Business Secretary Kwasi Kwarteng is still to rubber seal the deal, which will see Parker sell its Ohio-based aircraft wheel and brake division.
The European Commission’s statement read: “The remedy package offered by Parker will preserve competition in these markets and ensure that aerospace and defence customers have access to sufficient choice of component suppliers and will continue benefiting from competitive prices.”
The CMA has concluded its report to Kwarteng, but he has yet to make any further comment on the deal. (Source: News Now/https://www.thebusinessdesk.com/)
12 Apr 22. Liberty Hall Capital Partners Acquires Ferra Holdings Limited. Leading Supplier of Highly Engineered, Complex and Advanced Components and Sub-Systems Business Becomes Sixth Firm to Integrate into Accurus Aerospace Platform. Liberty Hall Capital Partners (“Liberty Hall”), a private equity firm focused exclusively on investments in businesses serving the global aerospace and defense industry, announced today the acquisition of Ferra Holdings Limited (“Ferra”) by Accurus Aerospace Corporation (“Accurus”), a leading global supplier of highly engineered structural parts, complex assemblies and electromechanical subsystems to the global aerospace industry focused on the highest value and fastest growing commercial, business jet, military aerospace and space platforms. Terms of the transaction were not disclosed.
“The acquisition of Ferra is highly strategic and transformational for Accurus,” said Rowan Taylor, Liberty Hall’s founding and Managing Partner. “The combination creates a truly global, more diversified and balanced business with expanded capabilities allowing us to better serve all of our customers – whether commercial aerospace, military aerospace or space customers – across the globe.”
Robert Kirkpatrick, President and CEO of Accurus, said: “The acquisition of Ferra expands our complex and advanced manufacturing capabilities, extends our geographic presence and creates greater end market, customer and platform balance. The ‘new’ Accurus is a highly differentiated aerospace supplier with a global manufacturing footprint and strategic relevance to our customers and serves as a partner of choice for complex and advanced manufacturing work statements.”
Brisbane, Australia-based Ferra is a leading global provider of highly engineered, complex and advanced components, sub-systems and assemblies for the military aerospace and commercial aerospace end markets and serves as a strategic supplier to several key industry original equipment manufacturers as well as the Australian Department of Defence. Founded in 1992, Ferra operates four manufacturing facilities located in Australia, the United States and India with approximately 200 employees. Ferra’s largest customers are The Boeing Company and Lockheed Martin, and its largest platforms are the F-35 Joint Strike Fighter and the Ghost Bat (formerly known as the Loyal Wingman).
Ferra’s existing management team, led by Managing Director Aaron Thompson, will remain in their roles following the acquisition. “We are incredibly proud of what we have accomplished over our thirty-year history, and we are excited to partner with Accurus in order to accelerate growth across our core business areas,” said Mr. Thompson. “We look forward to leveraging Accurus’s resources, relationships and manufacturing excellence to continue to expand sovereign supply chain capability within Australia, better serve our strategic partners, including the Australian Department of Defence, and further penetrate the military aerospace and space end markets,” he added.
Lazard served as financial advisor and equity placement agent to Liberty Hall and Accurus. Equity financing was provided by funds managed by Oaktree Capital Management, L.P. and Northleaf Capital Partners. Legal advice to Liberty Hall and Accurus was provided by Gibson Dunn & Crutcher, MintnerEllison and Schulte Roth & Zabel.
Friday Capital served as financial advisor to Ferra and the seller. Legal advice was provided by Corrs Chambers Westgarth, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and Osborne Clarke.
About Liberty Hall Capital Partners
Liberty Hall Capital Partners is a private equity firm focused exclusively on investments in businesses serving the global aerospace and defense industry. Liberty Hall’s principals have a 25-plus year history of working together and have led the investment of over $2.5bn in equity capital in over 25 businesses serving multiple segments of the aerospace and defense industry. Liberty Hall was founded in July 2011 as the first, and remains the only, private equity firm focused solely on investments in middle market businesses serving the aerospace and defense industry. Liberty Hall executes a proven and repeatable investment strategy designed to transform middle market businesses into larger, more capable and diverse strategic assets. For more information, please visit http://www.libertyhallcapital.com/.
About Accurus Aerospace Corporation
Accurus Aerospace Corporation is a leading global supplier of highly engineered structural parts, complex assemblies and electromechanical subsystems to the global aerospace industry focused on the highest value and fastest growing commercial, business jet, military aerospace and space platforms. Accurus was formed in November 2013 by Liberty Hall Capital Partners and has since completed six acquisitions, including Precise Machining & Manufacturing (2013), McCann Aerospace Machining (2014), LaCroix Industries (2015), J&M Machine (2016), ZTM (2016) and Ferra Holdings. Accurus operates eight manufacturing facilities located in the United States, Australia and India and possesses highly complementary capabilities that allows the company to deliver its products to its customers with optimal cost, quality and delivery. For more information, please visit https://www.accurusaero.com/. (Source: PR Newswire)
11 Apr 22. Smart Money Pours Into HKATG. Hong Kong Aerospace Technology Group Limited (HKATG; 01725. HK) announced its strategic cooperation with the Company and Shandong Institute of Industrial Technology for the construction and operation of the first high-resolution agricultural satellite constellation (”Golden Bauhinia — Qilu Satellite Constellation”) on 4 April. It is known that the first phase of the project comprising 9 satellites and the first experiment satellite is expected to be launched in July 2022, and the remaining eight operational satellites with 8-band multi-spectral observation capability will be launched in December 2022.
After the news came out, a huge amount of smart money poured into HKATG, its stock soared for 4 consecutive days between 4 April and 8 April. HKATG recorded a four-day gaining streak from its latest low of HK$12.2, in addition to crossing above 10-day and 20-day exponential moving average (EMA), the stock, a new high in three months was made during intraday trading on 8 April. HKATG surged by more than 100% in a few days, and the trading volume moved against the market which up to nearly 800,000 shares, with a capital of HKD 16.83m involved and an amazing momentum.
According to the Flow of Funds, several foreign and local banks have been increasing their holdings in the past few days, showing confidence in HKATG’s prospects. Previously, HKATG announced its collaboration with the College of Engineering of the City University of Hong Kong (”CityU”), the parties have entered into a letter of intent (the ”LOI”) concerning the strategic cooperation in the research and development of advanced satellite technology and related applications in Hong Kong, covering communication systems, antenna technology, advanced materials, data processing, and energy management. With the dominant position in the local commercial aerospace market, HKATG is well-positioned for endless business opportunities.
Annual Results Not Fully Reflected Upcoming Profits
HKATG announced the consolidated annual results for the year ended 31 December 2021, though the gross profit recorded a year-over-year decline of approximately 25.2%, smart investors seem to be aware that last year’s results did not reflect several strategic agreements signed by the company since the beginning of 2022, so they bought immediately while the stock price pulled back.
If you read the company’s annual report carefully, it is not difficult to analyze the reasons that influence HKATG’s gross profit in 2021. The company’s key construction, the Satellite Operation Control, and Application Centre at the AMC Premises put into operation last year, which has led to an increase in operating costs while representing a milestone in the production capacity expansion. It is worth mentioning that, according to the latest annual results, the company’s net impairment losses on financial assets as of 31 December 2021 have narrowed significantly, from RMB 5,122,000 in 2020 to RMB 131,000 in 2021, the result is quite encouraging.
An exclusive aerospace manufacturer in HK
According to the management of HKATG, the company will gradually put into production batches of optical remote sensing satellites, these satellites will have different types of payloads such as multi-spectral and synthetic aperture radar and can comprehensively provide satellite remote sensing data and products that integrate different bands. The company also announced earlier that those 25 satellites are planned to be launched in 2022 for the “Golden Bauhinia Constellation”, and the ”Golden Bauhinia Satellite No. 1 (04)” is also ready to launch. With the launch of small satellites in batches, HKATG is expected to realise the on-orbit verification of miniaturized aerospace systems, laying the foundation for next year’s business constellation development.
”Golden Bauhinia Satellite No. 1 (04)” is another pilot satellite of the “Golden Bauhinia Constellation”, on the one hand, the satellite will conduct on-orbit testing and verification of micro-miniature remote sensing payloads, and on the other hand, the data generated during the satellite’s in-orbit operation will be widely used in agricultural monitoring, disaster prevention, and mitigation, as well as comprehensive urban management and watershed control.
Taking the supporting role in the development of Hong Kong into an international innovation and technology hub, HKATG certainly has a market-dominating position with explosive growth potential in the upcoming years and beyond. (Source: PR Newswire)
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.