In a historic agreement signed today (3 May) in Pretoria, South Africa's Denel (Pty) Ltd and Turbomeca, part of the SNECMA group of France, created a new company, TURBOMECA AFRICA for the manufacture of engine components and maintenance of helicopter engines and industrial turbines for trains and co-generation.
The agreement, signed by Public Enterprises Minister Jeff Radebe, Turbomeca CEO, Emeric d'Arcimoles, and Denel Chairperson, Sandile Zungu, gives the French parent a majority (51 per cent) holding in TURBOMECA AFRICA, with Denel retaining 49 per cent.
The new company was formed following lengthy negotiations between Turbomeca and Denel for the French company to acquire a majority equity holding in Denel's Airmotive division. Integral to South Africa's restructuring of state-owned enterprises, Government announced in October 2000 that Turbomeca was the preferred Strategic Equity Partner for Denel's Airmotive Division.
"The birth of this new company is in line with Government's overall objective to develop our country and our continent," Minister Radebe said. "Whereas Denel Airmotive will cease to exist under that name, the rebirth of its capabilities in a rejuvenated form - under the name of Turbomeca Africa - will strengthen South Africa's position in the global aerospace environment."
The new company will manufacture engine components for Turbomeca, General Electric (GE AE), Rolls-Royce and Volvo, as well as repair and overhaul certain types of Turbomeca, SNECMA and other engines. It is also now the only service centre for Turbomeca products on the African continent, responsible for sales, maintenance an customer service. The new company will support its engines in use by the South African Air Force (SAAF).
Turbomeca Chairman and CEO Emeric d'Arcimoles commented: "The South African market has always been important to us and we have established strong roots in the country. In Denel we have a partner which has been responsible for maintenance and repair of our entire product range for a long time," he said. "I believe we can jointly build the Airmotive business for long-term sustainable growth, thus enlarging Turbomeca and South Africa's presence on the African continent and to contribute to the global authority of our parent, Snecma," Mr d'Arcimoles concluded.
Predicted turnover for the new Turbomeca Africa will be between R300 and R400 million (30 to 40 million Euro) per year. Turbomeca agreed to channel its Defence Industrial Participation (DIP) obligations through the new company.
It will also make strategic contributions to Turbomeca Africa, mainly the transfer of technology, the implementation of a comprehensive training programme, access to new markets and procuring additional workload to the value of some R200 million over a period of five years.
Denel in turn agreed to provide the new company with specialised processes and services that were not included in the sale of Airmotive. These include services such as the foundry, heat and surface treatment, paint shop and the technical library.
The new company would continue to manufacture gearboxes and parts for aero-engines in terms of agreements Denel Airmotive had with Rolls-Royce and General Electric Aircraft Engines (GEAE).
The transaction provides for Denel to retain the right to introduce a Black Economic Empowerment partner into the shareholding at some future stage, without diluting the parent Turbomeca's holding in the new company.
Turbomeca Africa's Board of Directors will consist of seven members of which four are to be appointed by Turbomeca and three by Denel. Of the four Turbomeca members, two will be executive, one of which is to be the CEO.
The agreement also provides for the South African Government to be issued with a "golden share", allowing it to appoint at least one director.
"Government may use its Golden Share to ensure the South African National Defence Force and the South African Air Force will continue to receive the full service and supplies they had been getting from Denel up to now," Minister Radebe said.
Turbomeca Africa will be based on the premises occupied until now by Denel Airmotive. The agreement provides for a long-term lease on these premises.
BACKGROUND:
Since its foundation in 1938, Turbomeca has produced 48 000 turbine engines and now supplies 2 000 customers in over 140 countries. It draws on the expertise of eleven subsidiaries, 30 service centres, 25 repair centres and 70 field representatives / mechanics to provide a particularly high degree of customer service. Its head office is at Bordes in southwest France.
Turbomeca (Sales: 525 Million Euro; 3,600 employees) is part of SNECMA, the aerospace propulsion and equipment group with Sales of 6,893 million Euro and 37,000 employees. Turbomeca subsidiary, Microturbo, is the European leader in turbojet engines for missiles, drones and auxiliary power units.
Turbomeca has been committed to South Africa's defence forces for over a quarter of a century:
--The South African Air Force's (SAAF) Alouette helicopters were powered by ARTOUSTE engines and the Oryx helicopters utilize MAKILA engines. --The Rooivalk attack helicopter is equipped with Turbomeca MAKILA. --In 1999, after fierce competition, Turbomeca's ARRIUS 2K2 was selected for the Agusta A109 LUH helicopters for the SAAF. The 2K2, launched in 1981, offers "hot and high" capabilities particularly suited to the South African environment. --The ADOUR, manufactured jointly by Rolls-Royce and Turbomeca, is also to power 24 Future Hawk aircraft for the SAAF. --In the civil market some 60 ARRIEL engines power Southern African Development Community (SADC) helicopters. These include the Eurocopter Ecureuil and Dauphin, EC120, EC135 and AS355N; the Sikorsky S76 and Agusta A109 K2.
Although State-owned, Denel is registered under the South African Companies Act and operates as a profit-driven company. At the end of 2000, the South African Government announced its intention to sell some shareholding to international strategic equity partners.
Denel consists of several predominantly manufacturing divisions. It has 10 500 employees and in its last trading year generated R3,75-billion in turnover. Denel's capabilities were established over a period of 50 years, with the formation of its oldest manufacturing divisions.
A broad range of Denel products and systems has been sold and is supported worldwide. The company has international alliances and joint ventures with some of the world's top aerospace and defence companies.
