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BBA Aviation

BBA Aviation Plc Proposed sale of Ontic for $1,365 million to CVC Fund Vll

BBA Aviation plc (LON: BBA), a market-leading provider of global aviation support and aftermarket services, has today announced that it has entered into an agreement for the sale of Ontic, a leading provider of high-quality, OEM-licensed parts for legacy aerospace platforms, to CVC Fund Vll, for an enterprise value of $1,365 million, subject, inter alia to shareholder approval and regulatory consents.

Transaction highlights

· Sale of Ontic for an enterprise value of $1,365 million, on a cash-free, debt-free basis

· Transaction multiple meaningfully above BBA’s trading multiple of 11.4x FY18 underlying EBITDA

· Transaction unanimously supported by the BBA Board as being in the best interests of shareholders

· Transaction will enable enhanced focus and investment in the Company’s market leading Signature business, which the Board believes to be a significant source of future shareholder value creation

· Transaction should allow for a capital return to shareholders expected to be between $750 million and $850 million, to help ensure that the net debt of the Retained Group remains near the lower end of the stated target range of net debt to underlying adjusted EBITDA of 2.5 to 3.0 times at 31 December 2019, on a covenant basis

· Transaction is conditional upon approval by BBA’s shareholders and various other approvals (including the consent of certain Group lenders or replacement of certain financial indebtedness, and consent to the release of applicable security by the Group’s Pension Trustee)

· Completion is expected in Q4 2019.

Mark Johnstone, BBA Aviation CEO commented:

“We are delighted that we have reached an agreement to sell our Ontic business to CVC Fund Vll for $1,365 million, delivering compelling value for BBA shareholders. While maintaining a strong balance sheet, we also expect to return between $750 and $850 million to shareholders and will evaluate how best to structure this return after consultation with our shareholders.

Ontic was acquired by BBA in February 2006 for $67 million and has grown successfully through the acquisition of licences, organic and inorganic growth, and a disciplined approach to investment. This success has been based on trusted partner relationships with key aviation original equipment manufacturers. It now supports more than 39,000 legacy aircraft, through its portfolio of over 165 licences for more than 7,000 parts and over 1,200 customers worldwide.

I would like to take this opportunity to thank all of our Ontic employees for their contribution to BBA Aviation over the years, and wish them well in the next stage of their journey.

The Ontic disposal will allow BBA to focus on its core Signature business, the leading global FBO operator and service provider for the B&GA market. BBA shareholders will continue to benefit from Signature’s ability to outperform the B&GA market through the cycle, as well as Signature’s ability to take advantage of its significant opportunities for future growth.

We remain committed to delivering long-term sustainable value from Signature, a strongly free cash generative business, which after funding investment requirements, should underpin both progressive dividends and ongoing returns of capital to shareholders.

The ERO disposal process is ongoing and we expect to update the market in due course. Disposal proceeds would provide an opportunity to further enhance our proposed return of capital.”

James Mahoney, Senior Managing Director, CVC Capital Partners commented:

“Ontic is a growing, highly resilient business and a leading player in what we believe to be a very attractive market. We see multiple opportunities to develop the business further and look forward to working closely with Ontic’s excellent management team to take the company to the next level.”

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