BBA calls for pounds 126m via rights: Issue to fund two purchases

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The Independent Online
BBA Group, the automotive, industrial and aviation group, launched a pounds 125.9m rights issue yesterday to help to fund its bid to become one of the world's leading suppliers of high voltage electrical power equipment.

BBA is making two separate acquisitions costing pounds 86.1m, including pounds 32.2m of assumed debt, in Switzerland and Germany. The pounds 39.8m cash left over after the acquisitions will be used to cut BBA's borrowings.

Peter Clappison, finance director, said end-1992 debt would fall from 61 per cent to 21 per cent of shareholders' funds including the sale last week of its Pacific BBA subsidiary for pounds 59m. Gearing could rise to 30 per cent or pounds 150m by the end of 1993.

BBA is buying Haefely, a Basle- based manufacturer of electrical components and test equipment used in high voltage electricity transmission, for Sfr110m ( pounds 49m). About a quarter of the price is deferred until January 1995.

BBA is paying pounds 4.9m for MWB. Located in Bamberg, Germany, it is world leader in making explosion- proof gas-insulated instrument transformers and also manufactures test equipment.

John White, group managing director, said the aim was to combine the new companies with BBA's Canadian subsidiary, Trench, which is a world leader in air-cored reactors and the largest maker of instrument transformers in North America.

'It is consistent with our strategy of focusing on a portfolio of world class core activities. Synergies will enhance our earnings in 1994.'.

The new grouping, Haefely Trench, would have a market share of about one-third in coil products, instrument transformers and high voltage test equipment. Customers are electricity utilities and prime contractors.

The rights are on the basis of one new share at 142p for every four ordinary shares and 7.3206 convertible shares now held. BBA shares closed 7p down at 170p.

There was disquiet among some analysts that BBA had begun to spread its interests too widely.

Sandy Morris, an analyst at NatWest Securities, said: 'I asked BBA how many core activities they now have and we got as far as eight. The acquisitions themselves are difficult to take issue with, but it's a rights issue too far and not really in the shareholders' interests.'