Home / News / Avcorp completes acquisition of Hitco Carbon

Avcorp completes acquisition of Hitco Carbon

24 Dec '15

2 min read

Avcorp Industries has completed acquisition of the assets and certain liabilities of the composite Aerostructures division of SGL Carbon SE's subsidiary, Hitco Carbon Composites.

According to an Avcorp press release, the acquisition, which was first announced in July 2015, will approximately double Avcorp's revenue while strengthening its balance sheet.

This acquisition will also significantly expand Avcorp's carbon composite manufacturing capabilities and result in the company receiving cash, payment commitments and supplies valued at approximately Canadian $65 million.

“The acquisition of the assets and certain liabilities of Hitco represents one of our most significant milestones to date and is strategic on a number of levels,” said Pete George, Avcorp Group's CEO.

“Without incurring any debt or diluting shareholders through the issuance of new shares, we have significantly strengthened our ability to address the growing market for composite airframe structures in the aviation sector,” he added.

Adding Hitco's Aerostructures division's manufacturing facilities to its operations will be immediately accretive and will almost double its revenue of around $165-175 million on a pro forma annualised basis.

With expected operational efficiencies and improved utilisation of its existing facilities in Delta and Burlington, the transaction will accelerate its expected return to profitability.

Avcorp will receive approximately $58 million in cash and payment commitments from SGL and also receive in kind supplies and or payments totaling up to $7 million through December 31, 2016.

Supplementing the cash and in kind payments received, Avcorp will assume approximately $41 million of working capital, adding to the positive liquidity of the transaction.

Equipment received as a component of the acquisition transaction has an estimated fair market value of $54 million and Hitco is expected to contribute $93 million in new revenue for Avcorp on an annual basis.

While the Hitco Aerostructures division has been operating at a loss; Avcorp will continue to operate Hitco's Aerostructures division facilities from its current location, transitioning to the new name of Avcorp Composite Fabrication. (AR)

Fibre2Fashion News Desk – India