BAB Babcock International Group Plc

TIDMBAB

RNS Number : 2627D

Babcock International Group PLC

14 May 2012

14 May 2012

Babcock International Group PLC (Babcock or the Group)

Disposal of VT Services Inc

Summary of disposal

Babcock has entered into a conditional agreement for the sale of VT Services Inc, the Group's US defence business to VT Holdings Inc, a special purpose vehicle backed by The Resolute Fund II, LP, a private investment fund managed by The Jordan Company II, LP for the consideration of $98.75 million (GBP61 million) which will be payable in cash on completion of the disposal as adjusted for changes in working capital transferred.

Background to and reasons for the disposal

VT Services Inc is an engineering support and facilities management business. The business was acquired as part of Babcock's acquisition of VT Group plc, which was completed in July 2010.

Following the acquisition, a strategic review of the combined Group was undertaken and in July 2011 Babcock announced that the acquired US defence operations did not meet its strategic objectives.

For the 2011/12 full year, VT Services Inc reported underlying revenue of $324.1 million (GBP202.1 million) and operating profit of $23.4 million (GBP14.7 million), which included $4 million (GBP2.5 million) of provisions for deferred consideration on previous acquisitions written back. The value of the gross assets of the business at 31 March 2012 was $164.6 million (GBP103.0 million) after impairment of goodwill of $93.5 million (GBP58.5 million).

The net proceeds of the disposal will be used to reduce the Group's total net debt position.

Conditions of the disposal

The disposal will be subject to the satisfaction of certain anti-trust and regulatory conditions including

-- the waiting periods under the United States Hart Scott-Rodino Antitrust Improvements Act of 1976, and the regulations made thereunder in respect of the disposal having expired or been terminated.

-- confirmation from the US Defence Security Service of the termination of the Proxy Agreement which regulated Babcock's ownership of VT Services Inc.

The disposal is expected to complete by the end of June 2012. The VT Services Inc operations and impairment charge will be treated as discontinued at 31 March 2012.

Commenting on the disposal, Peter Rogers, Chief Executive said:

"As previously announced, VT's US defence operations do not meet our strategic objectives and this transaction secures their disposal. We would like to thank the management team for their on going support throughout this process and wish our former employees the best for the future."

Enquiries

   Babcock International Group PLC                                                   020 7355 5300 

Terri Wright - Head of Investor Relations

FTI Consulting 020 7269 7291

Andrew Lorenz 07775 641 807

Nick Hasell

This information is provided by RNS

The company news service from the London Stock Exchange

END

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