BBA sells stake in Australian offshoot

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THE AUTOMOTIVE, aerospace and industrial group BBA is pulling out of Australia with the sale for Adollars 120m ( pounds 59m) of its 57 per cent stake in Pacific BBA.

Last week, in its preliminary results announcement, it signalled that it aimed to reduce borrowings by the sale of non-core activities in order to concentrate on developing its core businesses in North America and Europe.

Peter Clappison, finance director, said that BBA's net debt would fall from 61 to 44 per cent of shareholders' funds after the disposal, based on borrowings shown in the company's end-1992 balance sheet.

Pacific BBA was valued in the balance sheet at pounds 36.8m. As a result of the sale BBA will net a profit of pounds 14.7m after paying capital gains tax of pounds 7.5m.

Although the sale of its Pacific BBA stake had been widely expected, news of the disposal sent BBA shares 7p higher to 171p.

'It is a good price,' said Sandy Morris, of NatWest Securities. 'But the reason that the shares have gone up is that the sale brings gearing down and somewhat reduces the possibility of a rights issue from BBA while making its 7.5p dividend look even more secure.'

Bain Securities, an associate of Morgan Grenfell, bought and placed the Pacific BBA stake.

BBA said that Pacific BBA had operated as a separate entity for some time. This was underlined in November 1989 when BBA obtained a listing for the company on the Australian Stock Exchange.

Pacific, which manufactures for the Australian automotive, industrial plastics and building products markets, made pre-tax profits of pounds 8.3m in 1992 on sales of pounds 121.3m and had net assets of pounds 64.5m on 31 December.