UPDATE 1-UK's Babcock eyes cutting debt with $400 mln consultancy unit sale

(Adds CEO quote, debt, details of disposal programme)

Aug 13 (Reuters) - Babcock International Group said on Friday it had agreed to sell its consultancy unit Frazer-Nash for 293 million pounds ($404.5 million) to help shore up the British engineering firm’s balance sheet and cut debt.

The company, whose net debt was 1.35 billion pounds as of March 31, began reviewing its balance sheet and contract profitability after hiring new leadership last year.

Frazer-Nash is part of Babcock’s services to the marine sector and operates from nine UK and four Australian locations, the company said, adding that the deal would require approval by the Australian foreign investment authority.

The company counts the UK Ministry of Defence as its biggest customer.

“We are making real progress on our plan to streamline and focus the group on our key markets,” Chief Executive Officer David Lockwood said, adding that the unit was a good fit for U.S. engineering firm KBR, its new owner.

The sale forms part of Babcock’s targeted disposal programme, which aims to generate at least 400 million pounds of proceeds in the next twelve months. ($1 = 0.7244 pounds) (Reporting by Pushkala Aripaka in Bengaluru; Editing by Ramakrishnan M.)