13 September 2021

Babcock International Group PLC (Babcock or the Group)

Sale of stake in AirTanker Holdings

This announcement contains inside information

Babcock, the international aerospace, defence and security company, is pleased to announce that it has entered into a definitive agreement with Equitix Investment Management Limited for the sale of its 15.4% shareholding in AirTanker Holdings Limited (AirTanker Holdings) for a cash consideration of £126 million, including the repayment of shareholder loans of £31.1 million¹, subject to any routine closing adjustments and before transaction costs.

AirTanker Holdings is an asset joint venture with Airbus, Thales and Rolls-Royce, owning fourteen A330 Voyager aircraft to support air-to-air refuelling, air transport and ancillary services for UK Ministry of Defence. Babcock retains its 23.5% shareholding in AirTanker Services Limited, which operates these aircraft. 

AirTanker Holdings is part of Babcock's Aviation sector and is accounted for by Babcock as an associate. For the year ended 31 March 2021, Babcock's share of associate income, included within the Group's loss, was £(1.1) million² and AirTanker Holdings had gross assets of £2.7 billion.

The sale is part of Babcock's ongoing targeted disposal programme, which aims to generate at least £400 million of proceeds. Proceeds from this transaction will be used to reduce net debt.

The deal is expected to complete by the end of this financial year, and is subject to regulatory approvals given the industry AirTanker Holdings operates in. There is no merger control condition. Remaining AirTanker shareholders have pre-emption rights over the Babcock shares.

The agreement constitutes a class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules, and as such does not require Babcock shareholders' approval.

Babcock CEO David Lockwood said:

"This the third disposal we have announced as part of our ongoing programme to streamline the Group and, should all complete, ensures we will meet our target of generating at least £400 million of disposal proceeds this financial year. We are pleased to continue to maintain an interest in AirTanker through our work with AirTanker Services."

The person responsible for arranging the release of this announcement on Babcock's behalf is Jack Borrett as Company Secretary.

For further information, please contact:

Tulchan Communications

Olivia Peters / Graeme Wilson / Harry Cameron

Tel: +44 (0)20 7353 4200

Notes

1.     Net debt reduction on receipt of proceeds will be £95 million as shareholder loans are already included within the Group's net debt

2.     The results for the Group for the year ended 31 March 2021 included the impacts of the Contract Profitability and Balance Sheet review (CPBS). Excluding the one-off CPBS adjustments, Babcock's share of associate income after tax from AirTanker Holdings was £2.8 million