Umeco, the West Midlandsbased aerospace group which lists both Airbus and archrival Boeing among its customers, is on the brink of clinching a major new contract which could bring it business worth £280 million over ten years.
Chief executive Clive Snowdon yesterday said that the deal could triple Umeco's business with an unidentified existing customer in the UK and France.
He hopes it will be signed in the next three to four weeks.
However, it would require the relocation and expansion of an existing warehouse facility at Derby, which currently services jet engine manufacturer Rolls-Royce.
Umeco, which has its headquarters at Leamington, said the facility would be moved to a larger site in the Derby area, creating around 30 new jobs on top of the existing 140-strong workforce. The current site would then be sold off.
The group added that a proposed four for nine rights issue it announced yesterday would help it fund an estimated £3.5 million of working capital investment in the deal.
Mr Snowdon added that the group had received a very good level of support from existing and potential investors for the 350 pence per share issue, which will raise £48.4 million.
It is the second issue that Umeco has launched since March 2004, when it raised £20.7 million to part-fund its £46.5 million acquisition in May last year of advanced composites group ACG. Existing investors took up 96.7 per cent of that issue. Umeco plans to use the proceeds of the issue to fund the working capital needs of organic growth and contract wins, to reduce net debt of £66.6 million, fund expansion of ACG in the UK and US and to finance a number of acquisition opportunities in the UK, Europe, the US and Far East.
Umeco also said yesterday that it was buying Provest, a family run Italian distributor of aerospace fasteners and related products with sales of 15 . 3 million euros (£10.4 million) in the year to Dec 31, 2004, for 20 million euros (£13.6 million).
Mr Snowdon said Umeco was also looking at more "bolt-on" acquisition opportunities in the aerospace repair and overhaul sector in Europe.
He said the group, which employs a global workforce of around 1,400 people, was also examining, but has not yet reached agreement on terms for, a composite materials business in the US and a components and repair and overhaul-related business in Singapore.
Umeco, which operates three divisions - aerospace components distribution, composites and aerospace repair and overhaul - said it had turned in a very strong performance in the first half of the year to September 30, with revenues up 22 per cent to £132.7 million and adjusted operating profits rising by 38 per cent to £8.4 million. Adjusted pre-tax profits rose from £ 5 . 2 million to £6.6 million, an increase of 27 per cent.
The group said the recovery in civil aerospace was now firmly under way, with forecast aircraft deliveries by Boeing and Airbus increasing for the first time since 2001.
Mr Snowdon said Umeco expects the positive trend to last for at least five to six years, with much of the growth coming from the Middle East and Asia.
The interim dividend rises 11 per cent, to 5p and shares ended down 241/2p at 470p.
