31
January 2024
The information contained
within this announcement is deemed to constitute inside information
as stipulated under Article 7 of the Market Abuse Regulations (EU)
No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018.
Gama Aviation Plc (AIM:
GMAA)
("Gama Aviation" or the "Company" or "Group")
Gama Aviation strengthens
Special Mission offer.
Gama Aviation Plc (the "Company")
today announces that it has agreed to purchase (the "Purchase") the business of Specialist
Aviation Services Limited ("Specialist"), a helicopter special
mission business, as part of a pre-pack acquisition from its
appointed administrators.
Deal highlights
·
Adds further scale and strength to Gama's Special
Mission strategic business unit ("SBU") with some £27m of annual revenue,
three significant UK air ambulance charity contracts, six managed
Leonardo AW169 aircraft and two further national security contracts
in the Middle East.
·
The additional capability is complementary to the
Special Mission SBU adding a Leonardo Service Centre in Staverton,
Gloucestershire.
·
Operational synergies through combination of
operations are identified.
Marwan Khalek, Group Chief Executive, Gama Aviation Plc
commented: "This acquisition
accelerates our growth in our Special Mission SBU, adding scale in
the UK, building on our recent contract wins with amongst other the
Welsh Air Ambulance and opening new international operations in the
Middle East to complement our established fixed wing aircraft
management and MRO capability in the region.
We believe that there is
considerable potential within the trade and assets of this
business, that over the medium term will enhance the prospects of
the Special Mission SBU. However, given the nature of the
acquisition, our immediate priority is to ensure continuity of
service for the UK air ambulance charities such that they are able
to maintain their life-saving operations."
Background and rationale
Gama Aviation's Special Mission SBU
was conceived following a strategic review in 2020. As part of this
review several potential acquisition targets were identified which
would be complementary to the SBU's growth. Specialist was
identified as one of those businesses.
Specialist has a long history of
operating helicopters in the UK with a focus on special mission
customers. In recent years, it has expanded its capabilities
in maintenance and grew internationally, including winning
contracts in the Middle East, based on an excellent reputation for
quality of service and safety.
From 2021, the business has been
through operational and financial restructuring exercises, as part
of which it has sold aircraft to pursue an "asset light" business
model. Whilst these actions had improved the underlying
prospects of Specialist, the company determined that its capital
structure was unsustainable, and the underlying business outlook
would be improved through being part of a larger group with balance
sheet strength.
Specialist financial profile
In the 12 months to 31 December
2022, Specialist reported turnover of £24.3m (£24.7m in 2021) and a
pre-tax profit of £2.7m (loss of £6.1m), including exceptional
accounting profits from financial restructuring.
Whilst the results for 2023 have not
been published, the business would have reported an underlying
loss. In December 2023, Specialist, through its advisors,
determined that it was in the interests of Specialist to seek an
accelerated acquisition process via pre-pack
administration.
Acquisition details
The Group has acquired the trade and
assets of Specialist from FRP, the appointed administrator for a
consideration of £280,000.
Considering the initial working
capital requirements of the business at completion, provisions for
restructuring costs and transaction costs, the Group anticipates
the total cost of the acquisition will amount to
c.£3.0m.
The net asset value, excluding lease
obligations, is approximately £0. In the following weeks, the Group
will undertake a detailed review of the book value of the net
assets assumed as part of the Transaction, including appropriate
provisions. The Group will also assume lease obligations on
helicopters and property with customer contracts amounting to
c.£8.7m.
As part of the transaction
discussions, key customers and suppliers have agreed to amend,
extend and novate their contracts to the Company.
Amounts payable in connection with
the Purchase will be funded from the Group's existing financial
resources.
Financial effects
Whilst Specialist has been
loss-making historically, because of agreed changes to customer
contracts and certain identified cost savings in combination with
the Group, the business of Specialist under the Company is expected
to deliver underlying additional revenues of c.£27m per annum and
be breakeven at the profit before tax level in H1 2024. The
Group believes that further cost savings can be delivered over time
as the businesses are integrated, as well as the strategic benefits
to the Special Mission SBU.
Regulatory approval of the deal
The Civil Aviation Authority has
assigned all of Specialist's regulatory approvals to Gama Aviation
such that an orderly and safe management of change process may take
place.
Dial Partners LLP is acting as
Financial Adviser to the Company on the Purchase.
ENDS
Contacts
Gama Aviation Plc
Marwan Khalek, Chief Executive
Officer
Michael Williamson, Chief Financial
Officer
Tel: +44 125 298 4515
Dial Partners LLP, Financial Adviser
Angus Russell, Partner
Sandor de Jasay, Managing
Director
Tel: +44 207 098 7098
WH
Ireland, Nominated Adviser and Broker
James Joyce, Director
Tel: +44 207 220 1666
Camarco, PR
Geoffrey Pelham-Lane
Ginny Pulbrook
Tel: +44 203 757 4992
FRP
Advisory Trading Limited, Administrators of SAS
Andrew Marin Sheridan,
Partner
Jonathan Dunn, Partner
Tel: +44 203 005 4000
Gama Aviation - Notes to Editors
Founded in 1983 with the simple
purpose of providing aviation services that equip its customers
with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA) is a
highly valued global partner to blue chip corporations, government
agencies, healthcare trusts and private individuals.
The Group has three global
divisions: Business Aviation (Aircraft Management, Charter, FBO
& Maintenance), Special Mission (Air Ambulance & Rescue,
National Security & Policing, Infrastructure & Survey,
Energy & Offshore); and Technology & Outsourcing (Flight
Operations, FBO, CAM software, Flight Planning, CAM & ARC
services).
More details can be found
at: http://www.gamaaviation.com/