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Avcorp to acquire Hitco carbon composites business

News International-French

22 Jul 2015

Avcorp Industries Inc. announces that it has entered into a definitive agreement to acquire the US-based composite aerostructures division of a subsidiary of Frankfurt-listed SGL Carbon SE. 

The transaction will expand the capabilities of Avcorp in composites and offer a strong platform to grow the profitability of the business.

Pursuant to the agreement, Avcorp will purchase the assets of the division of SGL’s subsidiary Hitco Carbon Composites Inc. which produces composite parts for commercial and military aerostructures. This includes all inventories, equipment, tooling and other fixed assets, intellectual property, contractual rights, good will, accounts receivable, and work in progress. The corporation is not acquiring any assets of Hitco’s materials division. Avcorp will be continuing operations at Hitco’s current aerostructures facilities in Gardena, California.

The addition of the Hitco composites division is anticipated to approximately double Avcorp’s revenues in the immediate term. While not run as a separate accounting unit, the division has been operating at a loss.

Consideration for the acquisition of the assets is principally the assumption by Avcorp of current trade payables and ongoing contractual obligations of the aerostructures business of Hitco. Avcorp will receive approximately $42 million in cash and payment commitments. SGL will also provide further in kind supplies or payments of up to $5 million over the period to December 31, 2016. The purchase consideration is subject to customary adjustments based on working capital of Hitco and certain contract pricing adjustments being negotiated by Hitco.

Closing is subject to customary conditions, including finalization of other ancillary agreements, third party and regulatory approvals, and is anticipated to occur in Q3 2015.

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