10/7/2014 1:45:00 AM
HEADLINES
B/E Aerospace Unveils Spin-Off Fastener Company Plans
B/E Aerospace was trying to shop the company around to potential buyers when it decided in June to spin-off its Consumables Management business – primarily fasteners.
If B/E’s board members approve the move, the company would transfer Consumables operations to a newly created company, KLX Inc., according to documents filed with the Securities and Exchange Commission.
The spin-off reportedly would take the form of a pro rata distribution of all shares of common stock of KLX to B/E shareholders.
KLX would sell fasteners and other consumable products to over 4,700 global customers using “the broadest and deepest product portfolio in the world with over one million SKUs valued at over $1 billion.”
“Through organic growth and a number of strategic acquisitions beginning in 2001, we believe we have become our industry’s leading provider of aerospace fasteners, consumable products and supply chain management services,” according to KLX’s proposed corporate charter filed with the SEC.
In 2008 B/E Aerospace acquired Honeywell’s aerospace fastener distribution business, Honeywell Consumable Solutions, for $1.06 billion, transforming B/E Aerospace into one of the largest distributors of aerospace fasteners in the world.
As part of the deal, B/E signed a 30-year contract to become Honeywell’s exclusive licensee to sell fasteners, seals and other products, as well as supplying Honeywell’s production facilities.
KLX would serve as distributor for every major aerospace fastener manufacturer by using its $100 million proprietary IT systems.
An immediate goal of the new company would be to expand its customer base.
“Historically, we have focused our activities on the major OEMs and their subcontractors, but we believe there is a significant opportunity to expand our commercial MRO presence and that we can have a greater overall presence in the commercial airline maintenance market.”
The company would have an established presence in such locations as the United Arab Emirates, Australia, China, Singapore, India, Germany, Mexico and Italy.
Consumables Management operates a 62,000 sq ft manufacturing facility in Bridgeport, West Virginia, along with seven distribution centers in the U.S, two in Germany, two in the UK, and one in France.
In connection with the spin-off, long-time chairman and co-CEO Amin Khoury will step down from those rolls in B/E Aerospace. Werner Lieberherr would replace Khoury as CEO of B/E Aerospace, according to SEC documents.
Subsequently, Khoury would serve as executive chairman of B/E Aerospace and chairman and CEO of KLX. Khoury’s pay would be reduced by more than 50%, including a reduction in annual retirement benefits to $900,000 per year, in exchange for deferred cash payment.
In addition, B/E Aerospace CFO Thomas McCaffrey would step down from his role with the company and serve as president and COO of KLX.
B/E Aerospace has named Michael Senft as VP, CFO and Treasurer of KLX. Senft has over 30 years of experience as an investment banker, including roles with CIBC and Merrill Lynch.
KLX common stock would be listed on the NASDAQ under the ticker symbol “KLXI.”
KLX would be located at 1300 Corporate Center Way, Wellington, Florida 33414-2105. Tel: 561 383-5100
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