Brand-Rex Cable Businesses to be Sold for £145m
BICC PLC
6 March 2000
BICC TO SELL BRAND-REX CABLE BUSINESSES
FOR £145 MILLION CASH
BICC, the international engineering, construction and services group,
announces today that it has agreed to sell its datacommunication and
speciality cable businesses, Brand-Rex, to Caradon plc. The total cash
consideration is £145 million based on net assets as at 31 December 1999 of
£64 million.
Circulars will shortly be posted to shareholders convening extraordinary
general meetings, at which approval will be sought for the disposal, for
changing the name of the Company to Balfour Beatty plc and to repurchase
ordinary and convertible preference shares.
The Brand-Rex businesses manufacture and supply datacommunications cable
systems, comprising cables, components and accessories for local area
networks, and speciality cable for niche markets principally in the
transportation sector. For the financial year ended 31 December 1999, the
Brand-Rex businesses had sales of £135 million and pre-exceptional operating
profits of £9.2 million.
The Board believes that the Brand-Rex businesses have a greater value to
Caradon than as part of the BICC Group and has concluded that it is in the
best interests of shareholders to realise this additional strategic value
through the disposal.
The net cash proceeds received on completion of approximately £137 million,
after expenses, will initially be held on deposit and will in due course be
used in two ways.
Firstly, a number of potential acquisitions and investments have been
identified which would strengthen the Group's position in its chosen growth
areas, particularly in rail and privately financed projects. Discussions are
currently ongoing in relation to potential transactions in both North America
and continental Europe. A substantial proportion of the net proceeds of the
disposal are expected to be deployed in this way.
Secondly, it is intended that, subject to market conditions and future
circumstances, not less than £40 million will be utilised in buying back
ordinary and convertible preference shares. Authority to purchase shares
will be sought at an extraordinary general meeting and at a separate class
meeting of convertible preference shareholders. In exercising such
authority, the Group would ensure that the interests of both ordinary and
convertible preference shareholders are equitably addressed.
BICC Chief Executive, Mike Welton, commenting today, said:
'Following the radical restructuring of the Group in 1999, our activities
have become largely focused on the engineering, construction and services
activities of Balfour Beatty.
'Our priorities for 2000 are to further refine the business mix, invest in
our growth businesses and to continue managing the improvement and
development strategies in each of our four principal business streams.
'We believe that the disposal of Brand-Rex at a strategic value and the
proposed use of the proceeds will over time significantly increase
shareholder value.'
Following the disposal and proposed change of name, Balfour Beatty will
concentrate on four main activities: Building, Building Management and
Services; Civil and Specialist Engineering and Services; Rail Engineering and
Services; and Investments and Developments such as PFI and similar projects.
The Board believes that each of these sectors offers good opportunities for
sustained growth. Their prospects will be reviewed in more detail in the
announcement to be made this Wednesday, 8 March, in respect of the Group's
preliminary results for 1999.
_________________________________________
For further information, please contact:
BICC plc
Lord Weir, Chairman 020 7629 6622
Mike Welton, Chief Executive
Ian Tyler, Finance Director
Tim Sharp, Head of Corporate Communications www.bicc.com
Schroders
James Bardrick 020 7658 6000
Jan Skarbek
FURTHER INFORMATION AND NOTES TO EDITORS
Background to and reasons for the proposed disposal
During the course of 1999, BICC was radically refocused through the disposal
of its Telecommunication Cable businesses and Energy Cable businesses.
Following these disposals, BICC's activities have been dominated by Balfour
Beatty, a leading international engineering, construction and services group.
BICC was reclassified by the London Stock Exchange Limited in the
Construction Sector and has announced its intention to change its name to
Balfour Beatty plc.
In these circumstances, the Board concluded that the Brand-Rex businesses may
have greater value to third parties than as part of the BICC Group and that
it was, therefore, in the interests of shareholders to realise this strategic
value through the proposed disposal.
Financial effects of the proposed disposal
The book value of assets to be sold on a debt and cash free basis was £64
million as at 31 December 1999. The gain on disposal after transaction
costs, but before writeback of goodwill and tax, is £73 million. Goodwill
previously written off to reserves of £53 million will be charged through the
profit and loss account and accordingly the Board anticipates that the
disposal will result in an exceptional profit of approximately £20 million
and an increase in shareholders' funds of £73 million.
The disposal is not expected to result in a significant tax charge.
Information on the Brand-Rex businesses
The Brand-Rex businesses manufacture and supply datacommunication cable
systems, comprising copper and optical cables, components and accessories for
local area networks and speciality cables for niche markets, including
automotive, mass transit, telecommunications and aerospace.
The Brand-Rex businesses are headquartered in Glenrothes near Edinburgh in
Scotland and employ approximately 1,240 people worldwide. They have
manufacturing facilities in the UK and the Philippines and an international
network of sales offices and distributors servicing Europe, Australia, Asia-
Pacific, Latin America and the Middle East.
In the financial year ended 31 December 1999, the Brand-Rex businesses
achieved turnover of £135.2 million (1998: £125.5 million) and pre-
exceptional operating profits of £9.2 million (1998: £7.7 million) after non-
recurring costs of £1.5 million in 1999. As at 31 December 1999, the Brand-
Rex businesses had net assets of £48 million.
Information on Balfour Beatty plc
Following the disposal and the proposed change of name, Balfour Beatty plc
will be focused on four divisions:
Building, Building Management and Services
Balfour Beatty is an international specialist in the design, construction,
equipping, maintaining and management of buildings and selected aspects of
their internal environment.
Civil and Specialist Engineering and Services
Balfour Beatty is a leading provider of civil and other specialist
engineering, design and management skills, principally in the transport and
energy sectors of the international infrastructure market, and including the
United States.
Rail Engineering and Services
Balfour Beatty is an international leader in the design, construction,
equipping, maintenance and management of rail assets and systems.
Investments and Developments
Balfour Beatty promotes and invests in privately funded infrastructure
projects and developments in selected sectors in the UK and overseas.
J. Henry Schroder & Co. Limited, which is regulated by The Securities and
Futures Authority Limited, is acting for BICC and for no one else in relation
to the proposed disposal and will not be responsible to anyone other than
BICC for providing the protections afforded to its customers or for giving
advice in relation to the proposed disposal.
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