US disposal raises £310m to pay down Invensys debts

Invensys, the troubled engineering company, yesterday took another major step towards reducing its debt pile with the sale of its US emergency power supply division.

Invensys, the troubled engineering company, yesterday took another major step towards reducing its debt pile with the sale of its US emergency power supply division.

The company is selling its Powerware business, based in North Carolina and a supplier of back-up energy systems to IT companies, to Eaton Corp for $560m (£310m) to help pay down its £1.7bn of debts and ease its pension costs.

Powerware was bought by Invensys' forerunner, Siebe, in 1997 and has been on the sidelines of the group's business for some time. It was earmarked as the centrepiece of a major spin-off from the group before the collapse in its fortunes.

A period of over-expansion into a number of areas such as car parts and thermostats has left the Invensys group bogged down by crippling debts, and it recently came close to financial meltdown.

"Following our successful refinancing, the sale of Powerware is another step in the turnaround of Invensys and the strengthening of our balance sheet," Rick Haythornthwaite, the chief executive of Invensys, said yesterday. "Our focus now is very much on driving the growth and profitability of the businesses that we are retaining."

Shareholders last month backed a £2.7bn refinancing package for the company, which had a market value of £13bn at the end of 1999. The company has raised more than £1bn from selling businesses, and its workforce has shrunk by about a third in the past two years.

The $560m price tag for Powerware failed to top expectations in the City. "This is not exactly a huge number and we have all had it pencilled in for a while," one analyst said.

However, shares in Invensys closed up 0.25p at 21.75p as investors took heart that the disposal programme is coming to an end. There are still two divisions, Lambda and Baker, up for sale, which should raise a further £200m.