Babcock, Rolls Royce exit UK’s AirTanker parent company

Rolls-Royce and Babcock International have completed the sale of their respective stakes in AirTanker Holdings Limited to private equity firm Equitix Investment Management Limited.

In a statement, Rolls Royce confirmed it had now sold its 23.1% stake for cash proceeds of GBP189 million pounds (USD255.7 million). Proceeds from the transaction will be used to help rebuild the Rolls-Royce balance sheet in support of its medium-term ambition to return to an investment-grade credit profile.

Babcock sold its 15.4% stake for a cash consideration of GBP95 million (USD128.7 million), net of shareholder loans. The total cash consideration is GBP126 million (USD170.7 million), which includes the repayment of shareholder loans of GBP31.1 million (USD42.1 million). This shareholder loan was previously included in the Group’s net debt.

The completion of the transaction, which was first announced on September 13, 2021, follows clearance from the relevant regulatory authorities.

AirTanker Holdings is an asset joint venture with Airbus and Thales owning fourteen A330-200 Voyager aircraft powered by Trent 772B engines, a derivative of the Trent 700 engine. The Voyager aircraft support air-to-air refuelling, air transport, and ancillary services for the UK Ministry of Defence. This fleet is operated by AirTanker Services Limited t/a AirTanker (9L, Brize Norton), in which Rolls Royce and Babcock continue to be 23.5% shareholders respectively. Rolls Royce also continues to provide servicing and maintenance for the fleet of Rolls-Royce engines that power the Voyager aircraft to support the Royal Air Force.

AirTanker Holdings is part of Babcock’s Aviation sector and is accounted for by Babcock as an associate. For the year ended March 31, 2021, Babcock’s share of associate income was GBP2.8million (USD3.7 million) on an underlying basis, and interest income of GBP2.1 million (USD2.8 million) was included within the Group’s net finance costs. At March 31, 2021, AirTanker Holdings had gross assets of GBP2.7 billion (USD3.6 billion).

The sale is part of Babcock’s ongoing targeted disposal programme. This is the fourth disposal completed, bringing gross proceeds generated to date to GBP448 million (USD607.1 million), the company said.