Charter sells main stake in engineering for pounds 194m

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The Independent Online
CHARTER, THE engineering group, confirmed yesterday that it is selling the bulk of its specialist engineering division for pounds 194m in cash to a management group backed by Candover, the venture capital company.

The sale, which was in line with expectations, was flagged at Charter's first-half results announcement in September and allows the company to focus on Howden, its gas-handling division, and Esab, its cutting and welding business.

"We are pleased to announce that we have sold the majority of our specialised engineering divisions," Nigel Smith, Charter chief executive, said yesterday. "This represents a fundamental step in the restructuring of Charter..."

The group said that it would use the proceeds of the deal to cut its levels of debt, invest in its remaining businesses and, possibly, to buy back more of its own shares.

Charter said that Fountainfrost, backed by Candover, would take over Pandrol, which makes rail-fastening systems; Nederman, which makes fume, gas and dust-extraction systems; and UK Aerospace and Defence, a trio of businesses which make aircraft components.

In the year to December, the businesses made operating profits of pounds 25m on sales of pounds 178m. Their net assets were valued at pounds 41m.

Geoff Lodge, the former Charger managing director, who led the buy-out, said: "Each of the businesses has substantial growth prospects and, with Candover's support, we plan to capitalise on these."

The deal comes after Charter moved to accelerate a three-year restructuring to combat increasing competition, bringing forward deals from 2000 to this year. In September, Charter announced the loss of 700 jobs to cut costs as first-half pre-tax profits slid 37.1 per cent to pounds 28.1m.

Charter shares, which in April traded as high as 470p, ended 2.5p firmer yesterday at 315p. The deal is conditional on shareholder approval.