Babcock International Group PLC
33 Wigmore Street
Phone: +44 2073555300p:+44 2073555300 LONDON, W1U 1QX  United Kingdom Ticker: BABBAB

Babcock to sell rail and air emergency assets

Babcock International is preparing to put its rail business and parts of its aerial emergency services up for sale as the defence contractor seeks to restore its finances to a firmer footing.

Britain's second-biggest defence contractor is in the middle of a restructuring under chief executive David Lockwood.

The company recently told investors it hoped to generate at least £400m over the next 12 months from the sale of some of its businesses as it announced a £1.7bn writedown and 1,000 job cuts.

Babcock provides maintenance and support for the UK's nuclear submarines at Faslane, and was a member of the consortium that built the Royal Navy's new aircraft carriers.

It is one of the largest track renewal companies in the UK, supporting Network

Rail in maintaining the network, and is part of a joint venture electrifying thousands of miles of railways.

The company also specialises in the refurbishment of high-voltage power lines.

Babcock hoped to sell its rail and power activities as one combined sale, said two people familiar with the situation. Its training division, which provides engineering apprenticeships, is also being earmarked for sale.

The company intended to divest some of its aerial emergency activities outside the UK, the people confirmed. Babcock runs about 500 planes and helicopters for search and rescue and aerial firefighting in France, Italy, Spain, Sweden, Canada and Norway.

It has previously confirmed it is in talks to sell its oil and gas aviation unit, which provides helicopter transport for offshore workers, to US-based CHC.

Babcock acquired the aerial services assets in 2014 as part of its purchase of Avincis. However, Lockwood highlighted their poor performance when the group unveiled the £1.7bn writedown in April.

Selling the rail, civil training and parts of the emergency services operations could raise more than £300m in cash, according to an analysis of strategic options by house broker Jefferies.

The disposal of parts of its aerial emergency services would raise the bulk of that, at about £230m, according to the analysis.

Babcock declined to comment on its plans. The company is expected to update investors in coming weeks.

The review of the group was ordered after a changing of the guard last year following the departure of long-serving chief executive Archie Bethel and finance director Franco Martinelli.

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Tuesday, May 11, 2021