Hampson Industries, the aerospace components and tooling supplier, has put itself up for sale after warning that problems securing customer approval on its largest order could see some revenues and profits delayed into next year.
The Dudley-based company warned in November that it was in danger of breaching covenants stemming in large part from the poor performance of US businesses Odyssey and Michigan’s Global Tooling Systems, bought for a combined $253m in 2008.
The Odyssey and GTS businesses make tools used in the production of carbon composite parts for the Boeing 787 and F-35 Joint Strike Fighter, while Hampson has also supplied composite tooling for Airbus’s A350 programme.
Delays in customer approval of a $53m order from Boeing announced in September 2010 will result in the deferral of revenues and profits from the current year.
In a trading update on Tuesday, Hampson said that since October the completion of the disposal of its shims business – which makes spacers used in aerospace structures – for £51.5m and the settlement of a legal dispute with the former owner of the Odyssey business had seen net debt reduced to £54.9m. It had stood at £89m at the end of September.
But despite the reduction in its net debt, Hampson confirmed that it was extending its programme of asset sales being conducted under chief executive Norman Jordan and would invite offers for the whole company.
“The group continues to focus on refinancing its bank facilities,” it said on Tuesday. “The board of Hampson also believes it to be prudent to review actively all financing and strategic options, including a sale of the group and is therefore announcing the commencement of a formal sale process.”
The company, which has seen its share price fall from a high of 193p in 2007 to 7¾p on Monday, fell 1.85p or a quarter to 5.90p on Tuesday morning, valuing its equity at just £16m.
DC Advisory Partners and Sagent Advisors have been appointed to conduct a formal sale process for the company on both sides of the Atlantic. Hampson also confirmed it had received indicative offers for its Indian division and another of its businesses.
The appointment of sales agents follows three torrid years for the engineering group.
Claims that performance at Odyssey and GTS were “running in excess of our pre-acquisition expectations” in 2009 were soon followed by a costly renegotiation of debt covenants later that year as it edged net debt down to £141m, before launching a £60m share placing in February 2010.
That was followed by the announcement of the departure of Kim Ward, chief executive. Later in 2010 a consortium of private investors led by Midlands industrialist David Grove launched a successful legal claim against Hampson for almost £4m, which alleged “fraudulent misrepresentation” in the sale of a subsidiary Hampson was forced to unwind.
While that case was pending, Hampson issued another profits warning, following which Hampson itself launched legal action against Randal Bellestri, a US industrialist who sold Odyssey and GTS businesses to the company two years previously. That case was settled through an out-of-court settlement in December, when Hampson accepted a payment of $2.6m.
Mr Jordan joined Hampson as chief executive in September 2010 from a Toulouse-based subsidiary of Safran, the French defence and aerospace group, with a brief to lead a disposal programme to reduce debts.
Revenues at Hampson from October 1 to February were £55.6m, while the order book held steady at £119m.
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