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Avcorp acquires SGL subsidiary Hitco Carbon Composites

23 Jul '15

2 min read

Avcorp Industries Inc. has signed a definitive agreement to acquire US based composite aerostructures producer; Hitco Carbon Composites, a subsidiary of SGL Carbon SE.

“The transaction will significantly expand the capabilities of Avcorp in composites and offer a strong platform to grow the profitability of the business,” Avcorp said in a press release.

Avcorp will purchase assets like all inventories, equipment, tooling and other fixed assets, intellectual property, contractual rights, good will, accounts receivable, and work in progress.

Avcorp added that it is not acquiring the materials division assets of Hitco Carbon, a company which manufactures composite parts for commercial and military aerostructures.

The addition of the Hitco composites division is anticipated to approximately double Avcorp's revenues in the immediate term.

While not run as a separate accounting unit, the division has been operating at a loss and Avcorp informed that it will be continuing operations at Hitco's facilities in Gardena, California.

Avcorp further added that it will receive approximately $42 million in cash and payment commitments.

SGL will also provide further in kind supplies or payments of up to $5 million over the period to December 31, 2016.

The purchase consideration is subject to customary adjustments based on working capital of Hitco and certain contract pricing adjustments being negotiated by Hitco.

Closing is subject to customary conditions, including finalization of other ancillary agreements, third party and regulatory approvals, and is anticipated to occur in the third quarter of 2015.

Avcorp Group CEO Peter George said, “The acquisition of Hitco offers a unique opportunity to transform our business by broadening our product range and strengthening our composite capabilities.”

“We also anticipate significant operational efficiencies and better utilisation of our existing assets and combining the businesses should accelerate Avcorp's return to profitability,” George too added.

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing and Bombardier.

With more than 50 years of experience, over 380 skilled employees and 340,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers. (AR)

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