Cobham cuts debt after $455 million sale of communications units to Viavi

LONDON (Reuters) - British aerospace and defense electronics group Cobham said on Friday it has agreed to sell its AvComm and Wireless test businesses to Viavi Solutions for $455 million, as part of the latest stage of a turnaround plan.

Cobham, which had said in August that it may divest the units, plans to use the proceeds to reduce debt, further strengthening its balance sheet after a string of profit warnings forced it into a rights issue last year.

The company said it would be able to pay down about 440 million pounds ($627 million) of debt by combining the proceeds from the deal with existing cash.

The Wireless unit, which does 5G mobile network testing, and communications equipment maker AvComm, together account for around 10 percent of Cobham’s revenue. The group acquired AvComm through its ill-fated Aeroflex acquisition in 2014, which increased its debt burden.

Chief Executive David Lockwood, who took over in 2016 to lead a turnaround, had said there was little overlap between the Wireless and AvComm units and the rest of the business and the sale followed a competitive process.

“We can now focus on delivering value-add technology and capabilities to our defense, aerospace and space customers, supported by a more resilient balance sheet,” he said.

AvComm is based in the U.S., while the Wireless unit, is based in Britain, said Cobham, adding that the deal is expected to complete in the first half of this year.

Shares in Cobham closed at 124.8 pence on Thursday, valuing the company at 3 billion pounds.

Reporting by Sarah Young, editing by James Davey