BTG plans pounds 400m float for car transmission unit

BTG, which was privatised in 1995 to develop and market new technologies as a quoted company, is planning to unlock a significant part of its future value for shareholders by demerging and floating off its most valuable business, Torotrak, on the stock market this summer.

Torotrak is likely to be valued around pounds 400m on the strength of its revolutionary new automatic car transmission system, which can cut fuel consumption by 20 per cent and make a serious impact on exhaust emissions. It has already been licensed to seven of the world's biggest vehicle manufacturers, including Toyota and Ford, and also has five development contracts.

Together the 12 agreements cover 40 per cent of world production of transmission units.

With BTG's stock market value around pounds 645m and City analysts estimating Torotrak to be around 55 per cent of the total business, news of the float immediately unlocked some value for shareholders yesterday. BTG shares shot up 33.5p to 736p.

BTG shareholders will receive one Torotrak share for each share they hold in the parent company and the group will simultaneously raise pounds 50m through an issue of new shares to allow Torotrak to carry its development to the production stage by the year 2000, and hopefully to profitability around 2003.

BTG will keep a share of under 10 per cent, comprising a share stake and a share of future revenues.

Torotrak's board has already been beefed up with a new board headed by ex-General Motors executive David Wallis as chairman, with a finance director, product engineering director and three non-executives. The demerger documents will be published in a fortnight's time and share dealings in Torotrak should start on 14 July.

News of the Torotrak flotation came as BTG published results for the year to March showing a rise in losses from pounds 2.7m to pounds 9m, due to lower revenues from its magnetic resonance imaging system and the Pyrethrin insecticide, plus increased development spending on Torotrak.

Investment column, page 24