Stake at Babcock International
up more than 37% on Tuesday, after the UK’s second-largest defense contractor disclosed a £ 1.7 billion ($ 2.3 billion) debt and said it would seek to raise 400 million Pound from asset sales as part of a broader restructuring to turn the company’s results around.
FTSE 250 listed group said in a statement that the one-time fee, no fee, determined after evaluating the profitability of their contracts, is expected to lead to a decrease in profit The basic operating profit of the group is approx 30 million pounds each year.
The company employs 30,000 people worldwide, also said it is simplifying its business, which will result in the loss of 1,000 jobs, mainly in the UK, but also abroad. . The cuts are expected to save £ 40 million per year and will result in a one-time cost, mostly in cash, around £ 40 million.
Babcock said the liquidation of non-business is expected to generate £ 400 million over the next 12 months, adding that three processes are currently underway to test the market. Last month, Babcock said it was in talks to sell oil and gas parts for US-based helicopter service company CHC Group
Investors welcomed these proposals, sending Babcock shares up more than 37% to 333 pence in mid-morning London trading on Tuesday. Shares have risen 19.15% this year, according to data from FactSet.
Analysts worry that Babcock, which provides maintenance and support services to UK nuclear submarines in Faslane, Scotland, will need to mobilize shareholders to raise new capital.
However, Babcock CEO David Lockwood said that “through self-reliance, we aim to bring Babcock back to strength without the question of equity”.
“The return to the strategic, core services business is overdue for us. If the program restructures and handles ‘according to plan’, we will see the creation of physical value ahead, ”the equity team at Shore Capital wrote in a research report on Thursday. Three.
Babcock also produced draft, unaudited results for the year through March 2021, showing a base revenue of £ 4.69 billion, down from £ 4.87 billion the previous year. Basic operating profit dropped from £ 524 million to £ 307 million before special fees.