Spirit AeroSystems Divests FMI to Tex-Tech for $165 Million

Spirit AeroSystems Completes Sale of FMI Unit

Spirit AeroSystems Holdings, Inc. (NYSE: SPR), a leading manufacturer known for its expertise in aerostructures, has finalized the sale of its Fiber Materials Inc (FMI) business to Tex Tech Industries, Inc. for a substantial cash sum of $165 million. This decision marks a significant strategic move and is part of Spirit's ongoing initiative to enhance its operational focus.

Details of the Transaction

The transaction entails the transfer of FMI's facilities located in Biddeford, Maine, and Woonsocket, Rhode Island. With a focus on high-temperature materials and advanced composites, FMI has played a crucial role in a variety of sectors, particularly in defense and aerospace. The firm boasts a robust workforce of around 400 engineers and production personnel.

Importance of FMI's Capabilities

FMI specializes in products such as Carbon/Carbon composites, which are vital for applications like thermal protection systems and components used in rocket motors. Its materials are central to various high-profile defense and NASA programs, including missions to Mars.

Comments from Company Executives

Irene Esteves, the Chief Financial Officer of Spirit AeroSystems, emphasized that the sale is in the best interest of Spirit, its FMI division, and their customers, indicating a focus on long-term growth and efficiencies. Meanwhile, Scott Burkhart, CEO of Tex-Tech, highlighted that acquiring FMI will boost their capabilities in the critical space and defense markets.

Advisory and Legal Counsel

The transaction saw major financial and legal advisory inputs. Morgan Stanley (NYSE: MS) served as the lead financial advisor for Spirit AeroSystems, while Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice. Tex-Tech received assistance from Lincoln International LLC and Sheppard Mullin Richter & Hampton LLP in navigating the complexities of this acquisition.

Spirit's Financial Landscape

Spirit AeroSystems has presented a mixed financial picture recently, reporting a third-quarter revenue of $1.47 billion along with a net loss of $4.07 per share. Analysts suggest that its market valuation is closely tied to the ongoing arrangements with Boeing (NYSE: BA), particularly in light of the recent acquisition talks between Spirit and Boeing. A recent analysis revealed that Spirit's total debt stands at approximately $5.14 billion, reflecting ongoing financial pressures.

Company Adjustments and Future Developments

In light of the upcoming merger with Boeing, Spirit AeroSystems has announced strategic changes to its executive compensation structure. Certain restricted stock units (RSUs) that were originally scheduled to vest in 2025 have been moved forward to December 2024 for key executives, including the President and CEO Patrick M. Shanahan. In addition, the company is taking steps to manage its workforce, implementing a temporary furlough for around 700 employees as part of its restructuring efforts.

Tex-Tech Industries

Tex-Tech Industries, based in Kernersville, North Carolina, specializes in providing advanced material science solutions across industries such as aerospace, defense, medical, and more. With a strong manufacturing presence worldwide, Tex-Tech's acquisition of FMI is expected to expand its product offerings and enhance its position in the marketplace.

Looking Ahead: Spirit AeroSystems

As Spirit AeroSystems transitions through these significant changes, the focus remains on stabilizing its financial footing and ensuring continuous delivery of high-quality products to its clients. The recent furloughs and strategic asset sales highlight the company's commitment to adapting in a swiftly evolving market.

Frequently Asked Questions

What was the significance of Spirit AeroSystems selling FMI?

The sale allows Spirit AeroSystems to focus on enhancing its core operations while addressing significant debt obligations.

How much did Tex-Tech pay for FMI?

Tex-Tech acquired FMI for $165 million in a cash transaction.

What industries does FMI serve?

FMI's materials are integral to defense and aerospace applications, among others.

What recent financial challenges has Spirit AeroSystems faced?

Spirit reported a net loss of $4.07 per share and has a total debt of approximately $5.14 billion.

What changes have been made in executive compensation at Spirit?

Certain restricted stock units will now vest earlier in December 2024 for select executives in preparation for the merger with Boeing.

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