Spirit Delays Earnings, Starts Sale of Oklahoma Assets
Spirit Aerosystems Holdings Inc. (SPR), the Boeing Co. supplier that’s been a focus of takeover speculation, said it’s selling its production sites in Oklahoma and is reviewing other potential divestitures.
Spirit has held talks with potential buyers for the sites in Tulsa and McAlester, Oklahoma, and will consider all offers, executives said today on a conference call, without naming them. The company also hired a banker it didn’t identify, according to a statement today.
The shares pared declines of as much as 8 percent after executives on the call said they’re looking at other facilities to sell. In May, Chief Executive Officer Larry Lawson said Spirit would review programs in Tulsa as well as Wichita, Kansas, where the company is based; Kinston, North Carolina; and St. Nazaire in France.
The Tulsa site is “a very attractive asset and we expect some really good dialogue with a number of potential buyers,” Chief Financial Officer Philip Anderson said on the call. The Tulsa facility represents as much as 14 percent of the company’s $3 billion year-to-date revenue, he said.
Earlier today, Spirit delayed its quarterly earnings report because auditors haven’t completed their review. Spirit dropped 3 percent to $25.01 at the close in New York, paring its gain for this year to 47 percent.
Spirit has struggled with its own suppliers on capacity and costs as planemakers worldwide boost output. The company said it will record a pretax charge of $350 million to $400 million tied to work for General Dynamics Corp.’s (GD) Gulfstream business-jet unit, and is limiting draws on its credit facility until 2014’s last three months. No default event has occurred, Spirit said.
Standard & Poor’s cut its outlook for Spirit to negative from stable, saying the costs for the Gulfstream planes will keep credit ratios from improving this year. Spirit’s BB debt rating, two steps below investment grade, was left unchanged, S&P said.
The stock jumped 5.7 percent on July 25 after the U.K.’s Daily Mail said GKN Plc (GKN) was readying a takeover bid for about $35 a share. No such offer has been made public, and CEO Nigel Stein declined on a conference call last week to comment on any interest in the U.S. company.
Spirit makes components for all of Boeing’s current lineup of commercial jets, including the 787 Dreamliner, according to the company’s website. While Spirit also supplies Airbus SAS, Boeing accounts for about 84 percent of sales, data compiled by Bloomberg show.
Divesting Spirit’s Oklahoma assets won’t affect the supply chain at Boeing, said Howard Rubel, an analyst at Jefferies LLC. He rates Spirit as buy.
“One would believe that Boeing is very much involved with strategic decisions of a major supplier,” Rubel said by phone from New York. “They would be very much focused on ensuring a smooth transition from one owner to another owner.”
Spirit said it plans to reschedule its second-quarter filing, where it will report revenue of $1.52 billion, an increase of 13 percent from a year earlier.
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