Babcock sells oil and fuel aviation enterprise for £10m
Defense and engineering giant Babcock International Group Plc has sold its oil and gas aviation business for £ 10 million while it continues to work on a “turnaround plan” to deal with financial losses.
The sale to CHC Group LLC (CHC) comes just weeks after Babcock, which operates the huge Devonport shipyards in Plymouth and Rosyth, Scotland, was a consultancy to the naval division for £ 293 million.
The oil and gas business, part of the group’s aviation sector, provides offshore transportation services for oil and gas personnel in the UK, Denmark and Australia.
It is headquartered in Aberdeen, Scotland, employs more than 500 people and operates approximately 30 aircraft in its three locations.
For the year ended March 31, 2021, it had sales of £ 154 million, a pre-tax loss of £ 2 million and an underlying operating profit of £ 2 million. As of March 31, 2021, it had gross assets of £ 256 million, net assets without cash of £ 21 million and net lease liabilities of £ 142 million.
The sale is part of Babcock’s targeted divestment program, which aims to generate at least £ 400m. The proceeds from this transaction will be used to reduce net debt.
It follows the sale of Frazer-Nash Consultancy in August 2021 to KBR, an American engineering giant, and marks the end of a 14-year partnership between Babcock and the Surrey-based engineering and technology consultancy that emerged from vintage car maker Frazer-Nash.
The consultancy, which works on submarine design and naval weapons, among other things, was part of Babcock’s marine sector, which focuses on its operations in Devonport.
The company employs approximately 900 people in the healthcare, energy, defense and transportation sectors and has nine UK locations including Millfields in Plymouth.
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David Lockwood, Babcock CEO, said the sale of the aviation oil and gas business, which transports workers to drilling rigs in the North Sea, is “part of our plan to streamline the group and focus on our key markets.”
He added, “Selling at least £ 400 million worth of businesses will allow us to reduce complexity and increase our focus as we re-empower Babcock. The oil and gas aviation business has found a new home and we wish them all the best for the future. “
In July 2021, Babcock reported an operating loss of $ 1.64 billion.
The agreement with CHC, a specialist in helicopter services, is a class 2 transaction within the meaning of the Listing Rules of the UK Financial Conduct Authority and as such does not require the approval of Babcock’s shareholders.
