Rolls-Royce sells Norway engine maker for £90m
ROLLS-ROYCE is a step closer to mending its balance sheet after the £90m sale of its norwegian engine-making business.
The FtSE 100 group, whose finances were ravaged by the pandemic, has sold Bergen Engines to British group Langley in a deal first announced in august. the norwegian government vetoed an earlier buyer, russian group tMH, on national security grounds because of its links with Vladimir Putin.
Rolls aims to sell £2bn of businesses to claw its way out of debt and get its credit rating back up to an investment-grade level. its shares rose 3.4pc, or 4.2p, to 127.08p.
The Derby-based engineer was hammered by the slump in international travel when the pandemic broke out – it earned around half of its income from servicing engines on long-haul planes. With flights grounded for months, the company racked up billions in losses and began burning through cash.
To combat the crisis, it cut 9,000 jobs from its 52,000-strong workforce and raised £5bn.
All three major credit rating agencies – Moody’s, S&P and Fitch ratings – slashed its credit rating to below investment grade, curtailing the number of firms that can invest in it.
Last august it revealed a firsthalf profit of £114m, and in February it will report its full-year figures. Bergen makes engines and technology for boats, as well as for Norway’s navy.
Since 1946 it has supplied more than 7,000 engines to customers, 4,000 of which are still in operation. in March, norway said a takeover ‘would have been of significant military strategic interest to russia, and would have boosted russian military capabilities’. TMH is controlled by iskander Makhmudov and andrei Bokarev, who have ties to the Russian president.
The deal comes as the UK yesterday introduced more stringent rules on foreign takeovers that could see more blocked by the Government. the national Security and investment act means investments and mergers in 17 sensitive areas of the economy such as defence and artificial intelligence will automatically be scrutinised.
The deal with Langley values Bergen at £53m, though the £90m rolls will receive includes cash and debt. rolls has sold another division, a Spanish arm called ITP aero which makes parts for the Eurofighter typhoon, for £1.4bn to private equity predator Bain Capital.
Langley has around 4,600 staff, while Bergen has 900. Langley makes handling equipment including for the Ministry of Defence’s submarine missile loading facility.