KLX to sell Aerospace business to Boeing; company also plans spinoff

By Devika Patel

Knoxville, Tenn., May 1 – KLX Inc. announced that its Energy Services Group business will be spun off into a new public company called KLX Energy Services Holdings, which will initially have no drawn debt, $50 million in cash and an undrawn credit facility on its balance sheet.

In addition, the company plans to sell its Aerospace Solutions Group business to Boeing Co.

For the Aerospace Solutions Group business, KLX shareholders will receive $63 per share in cash. Boeing will assume the approximately $995 million in net debt of the company at closing in exchange for $4.25 billion.

“We have agreed to sell our Aerospace Solutions Group business to Boeing Co. in an all-cash transaction with a sale of 100% of the shares of KLX Inc.,” chief executive officer Amin J. Khoury said on the company’s conference call announcing the sale on Tuesday.

“In addition to this cash payment, before the closing of the sale of the Aerospace Solutions Group business, KLX will distribute shares of a newly formed company to each shareholder of KLXI representing ownership in a new standalone public company called KLX Energy Services Holdings, or KLXE, which will be comprised of our Energy Services Group business.

“This spinoff will enable our existing KLX shareholders to participate in the rapidly increasing value of our Energy Services Group business,” Khoury said.

The new company will begin with cash and no debt although it will have a revolver available.

“KLX Energy Services is expected to be initially capitalized with $50 million of cash, no funded debt and an undrawn credit facility, which are intended to provide a conservative capital structure from which KLX Energy Services would be able to grow its business and realize its potential,” Khoury said.

The new company is expected to be cash flow positive in the second half of this year.

“When the company is spun, it will be spun with no drawn debt,” treasurer, vice president and chief financial officer Michael F. Senft said on the call.

“We will put the credit facility in place, it will be undrawn, at the time of the spin, and we expect to be cash flow positive in the second half of this year,” Senft said.

The spinoff is expected to close in the third quarter of 2018.

KLX is a Wellington, Fla.-based distributor of aerospace fasteners and consumables and provider of services to the oil and gas industry.

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