Sale of ERO to StandardAero for $230 million

17 February 2021 – Signature Aviation plc (“the Group”), a market-leading provider of global aviation support services, is pleased to announce that it has reached agreement with StandardAero, a leading provider of maintenance, repair and overhaul (MRO) services, on the terms of the sale of the Engine Repair and Overhaul (ERO) business for $230 million subject to customary adjustments for net debt, net working capital and transaction expenses.

ERO is a leading engine service provider to global business and general aviation operators, the rotorcraft industry and regional airline fleets with locations in the USA, Europe, South America and Asia and holds authorisations for nearly 80% of the B&GA fleet and over 65% of the rotorcraft fleet. As previously communicated in 2018, following a strategic review, the ERO business was classified as held for sale within our Discontinued Operations.

For the twelve months to 31 December 2019 ERO reported underlying EBITDA, on a pre IFRS 16 basis, of $29.1 million net of support costs. Gross assets of the ERO business as at 31 December 2019 were $358.1 million. The ERO support costs of $11.4 million, for the 12 months to 31 December 2019, will remain with the continuing Group and we will work to remove these costs upon legal completion of the transaction or following completion of transition services, to the extent such services continue to be delivered to ERO under the Transition Services Agreement we will enter into with StandardAero. The duration of transition services to StandardAero is not expected to exceed 12 months from the date of legal completion. The sale is expected to close during 2021 and is subject to the usual regulatory clearances.

The gross consideration of $230 million is expected to deliver approximately $140 million of net proceeds subject to tax recovery, the difference being predominately due to change of control fees but also reflecting purchase price adjustments, income taxes, professional transaction fees and other costs. The use of net proceeds will be consistent with our capital allocation policy, to manage net debt to underlying EBITDA (on a covenant basis), with a target range of 2.5-3.0x.

Mark Johnstone, Signature Aviation CEO commented “We are pleased that we have reached agreement to sell our ERO business to StandardAero, where we believe the business will continue to flourish. We are committed to delivering long-term sustainable value for shareholders and this sale focuses us on Signature Aviation our strong cash generative business. I would like to thank all the ERO employees for their hard work and commitment, during our many years of ownership.”