February 26, 2008
Executive Beechcraft's Parent Company Purchases Hawker Beechcraft's Line Service Operations
BBA Aviation Agrees to $128.5M Acquisition of Seven Domestic FBOs
BBA Aviation, holding company for both Executive Beechcraft and Signature Flight Support, today announces that it has agreed to acquire the assets of Hawker Beechcraft Services Inc's Line Service Operations for a cash consideration of $128.5M on a debt and cash free basis. The acquisition consists of seven geographically diverse Fixed Base Operations (FBOs) in strategically important growth markets in the USA. Each location is an important corporate aircraft destination and the assets represent a good mix of major business aviation, commercial and key reliever airports. Hawker Beechcraft will retain its factory-owned Hawker Beechcraft Services maintenance and customer support facilities co-located at these locations. Hawker Beechcraft's operations in Little Rock, Arkansas, Chester, England, UK, and Toluca, Mexico will not be affected.
In 2007 Hawker Beechcraft's Line Service Operations had sales of $73M, EBITDA margins of 12% and gross assets of approximately $16M. It is expected that the acquisition will be immediately earnings enhancing and returns should be in excess of BBA Aviation's cost of capital by 2010. Hawker Beechcraft is divesting its Line Service Operations in order to focus on its maintenance repair and overhaul business. The Line Service Operations will benefit from being part of a focussed FBO services group.
Hawker Beechcraft's Line Service Operations bases included in the transaction are located at Van Nuys, California; Tampa, Florida; Houston, Texas; San Antonio, Texas; Indianapolis, Indiana; Atlanta, Georgia; and Wichita, Kansas. The sites have an average lease term of 15 years.
The bases are highly complementary to Signature in terms of location, service reputation and quality of facilities. The acquisition will significantly strengthen Signature's network and provide an opportunity for real value creation through benefits associated with network fuel volume, price, cost and real estate, which are expected to be fully realised by 2010 with limited investment.
Closing of the deal is expected in May 2008 and is subject to Hart-Scott-Rodino and other third party approvals.
Commenting on the acquisition, Simon Pryce, Group Chief Executive, said: ‘I am delighted that we have been successful in securing these seven high quality locations which are so complementary to our existing facilities. There are excellent opportunities for performance improvement through incorporating these assets into our Signature network and the potential benefits for customers and employees are tangible and significant. This is another important step in extending Signature's network, further strengthening our position as the world's leading provider of airport services for business and general aviation'.
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BBA Aviation
BBA Aviation is a world leader in aviation services focusing on Aviation Flight Support and Aftermarket Services and Systems. BBA Aviation provides flight support services for corporate and commercial aviation customers as well as maintenance, repair, overhaul and spare parts for aircraft engines. It also supplies aviation components, landing gear and hydraulic systems. These are attractive niches in a $250 billion market with clear barriers to entry, where BBA has leading positions, well-known and reputable brands and a proven track record of organic and acquisition-led growth. BBA Aviation was formerly part of BBA Group, but following the demerger of Fiberweb, in November 2006 it became a stand-alone aviation services and systems support business operating mainly but not exclusively in the Business and General Aviation market.
Hawker Beechcraft
Hawker Beechcraft is a leading original equipment manufacturer specialising in the design, production and aftermarket support of various corporate, light airline and military training aircraft. Hawker Beechcraft was formerly part of the Raytheon Corporation prior to its sale to private equity investors, GS Capital Partners and Onex, in March 2006.
