Listed engineering group sells off non-core division for more than £6m
Specialist engineering group, Pressure Technologies, has agreed the sale of its PT Precision Machined Components division (PMC) to India-based Raghu Vamsi Machine Tools.
The deal is for an initial enterprise value of £6.2m, with the potential to increase to £7.7m dependent on the future performance of the division.
Sheffield-headquartered PMC manufactures components for use in safety-critical subsea and surface flow control applications, serving global oil and gas OEM customers through its Al-Met, Roota Engineering and Martract operations in the UK.
PMC was identified as non-core by the group, with a shift in strategic focus to the development and growth of its principal division, Chesterfield Special Cylinders (CSC). The sale leaves CSC as its only operating business.
Pressure Technologies explains its Board is now focused strategically on the development and growth of CSC in defence and hydrogen energy markets and in through-life Integrity Management services.
Contracts for the sale have been executed and exchanged between the company and the purchaser and the transaction is expected to complete no later than 8 October 2024.
Proceeds will be used to repay the outstanding balance of £1m of Pressure Technologies’ Term Loan, which was raised in November 2023 from two of its major shareholders.
The balance of the proceeds will provide increased working capital headroom and enable investment to support growth opportunities at CSC, including those in the developing hydrogen energy sector and the global defence market.
Steve Hammell, Pressure Technologies chief financial officer, will step down from the Board and leave the group on 31 October 2024.
The group adds this executive management change by mutual agreement recognises the considerable reduction in the scale and complexity of group operations following the sale of PMC.
Chris Walters, chief executive, said: “The completion of this strategic divestment will allow us to focus our resources on the development and growth of Chesterfield Special Cylinders in defence and hydrogen energy markets and in the provision of through-life inspection, testing and recertification services over the medium and longer term.
“The initial enterprise value of £6.2m provides good value for PMC at its underlying asset value, with the initial cash proceeds of £4.8m substantially strengthening the balance sheet of the group and enabling us to repay the Term Loan raised last year.
“In addition, we’re also eligible to receive further consideration up to £1.5m if PMC continues to perform well during its first year under new ownership.
“As he steps down from the Board, I would like to thank Steve Hammell for his significant contribution to the group over the past 18 months and wish him all the best in the future.”
Vamsi Vikas Ganesula, managing director of Raghu Vamsi Machine Tools, said: “We’re pleased with the strategic acquisition of the PMC business from Pressure Technologies.
“The respected brands of Al-Met, Roota Engineering and Martract will complement our existing engineering businesses and deliver strong operational and commercial synergies as we continue to expand our international footprint.
“We are very excited by the opportunities presented in the global oil and gas market with the blue chip customer base of PMC and will now work closely with our new colleagues in the UK to develop the long-term manufacturing capability and reach of our combined businesses.”
For the financial year ended 30 September 2023, PMC reported revenue of £11.3m, Adjusted EBITDA of £0.1m and loss before tax of £0.8m. At 30 March 2024, PMC reported net assets of £2.2m.
Pressure Technologies is being advised on the sale by DSW (corporate finance) and Addleshaw Goddard (legal).
