UK/NETHERLANDS/US - Engineering giant Invensys has sold off its Dutch software solutions subsidiary Baan as part of a move to plug its debts, including a £931m (e1.3bn) pension fund deficit in the UK.
The moves follows a further downgrade by ratings agency Moody’s. Invensys, which already has junk status, has had its rating cut from Ba1 to Ba3 with a negative outlook in light of its pension fund deficit and mounting costs.
Baan has been snapped up by US-based venture capitalists Cerberus Capital Management and General Atlantic Partners, a US private equity firm, for US$135m (e115m/£83m).
Rick Haythornthwaite, chief executive officer of Invensys, said: “With the sale of Baan, we have made a rapid and positive start to our disposal programme. “
“At the same time, we have also been mindful of our responsibilities to Baan customers, employees and partners and I am confident that they will be well served under the new stewardship.”
Earlier this year, Invensys, which pointed to a net debt of some £1.6bn at the end of March, indicated its intentions to hive off non-core units in a bid to plug leaking assets.
“Over the next two years Invensys will dispose of businesses in order to deal with liabilities, a substantial proportion of which relate to pensions,” said the company.
“In these circumstances FRS 17 will better represent the position of the Group.”
Invensys has recently embarked on a triennial actuarial review, conducted by Punter Southall, of its main UK pension scheme, based in Newcastle. A report is expected by September and conclusions will be presented in November along with interim results.
The company also said that it will continue to contribute to both its US scheme - which has a deficit of £291m (US$474m) under FRS17 - and its UK schemes.
A spokesman for Invensys estimated that a £25m contribution will be made to the US fund in 2004, followed by a £50m contribution in 2005.
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