Chemring Group has announced it is selling its European munitions business to Nexter Systems SA for a figure of £138m.
Following the sale, Chemring will become a focused defence technology business in sensors and electronics, countermeasures and energetic systems, it said.
Chemring will invest in those lines of business that have technologies, products and market positioning that offer sustainable high margins and revenue growth, it added.
Mark Papworth, chief executive officer of Chemring, said: “The sale of our European Munitions Business implements a key recommendation of our strategic review and represents a significant milestone as we reposition Chemring for future growth.
“It not only enables us to strengthen our balance sheet through the reduction of net debt, but also provides us with flexibility to invest in our core technologies.
“Following the Disposal, Chemring will have technologies, products and market positioning which provide opportunities to achieve sustainable high margins and revenue growth.”
Chemring will use the money raised to repay part of the Group’s revolving credit facility, with the balance offered to holders of the group’s loan notes.
Chemring added that there has been no material change to its current trading and prospects since its trading statement on Feb. 27.
The European munitions business comprises Mecar SA and Simmel SpA. As at Oct. 31, the businesses had gross assets of £205.4m and net assets of £98.5 million.