Orbital Engine Corporation has reached agreement with Siemens VDO Automotive Corporation on the terms of a restructuring and refinancing of their joint venture, Synerject LLC.
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Synerject is a US based manufacturer of air injectors and fuel rail assemblies for Orbital’s marine and motorcycle customers.
Synerject also supplies prototype air assisted direct fuel injection assemblies for automotive four-stroke and other programmes.
The current ownership structure of Synerject will remain, with both Orbital and Siemens each retaining a 50% interest.
Siemens and Orbital have agreed that Synerject’s scope will be broadened through the addition of Orbital’s marine and recreation systems business and a non-automotive systems business (Rotax) from the Siemens group.
New financing arrangements have been put in place until September 30, 2006 and replace the earlier funding arrangements which matured on September 30, 2002. Orbital’s existing guarantee of 50% of the funding has not increased and will not be called unless Synerject does not meet the terms and conditions of the revised facility.
“The restructuring removes considerable market uncertainty in regards to the future of Synerject and its ongoing operations,” said Orbital’s chief executive officer, Peter Cook. “The marine and recreation systems business and the Rotax business to be contributed to Synerject will create the opportunity for a more efficient and expedient service level to customers. The small profit and cash flow impact on Orbital from the transfer of its marine and recreation systems business to Synerject will be partly covered through identified cost savings within Orbital and Synerject’s improved profitability. These arrangements do not affect royalties being received by Orbital from this sector.”
The arrangements will be effective from February 1, 2003.
Cook added: “We are pleased to confirm that Synerject continues to be cash flow positive. Year to date, Synerject has exceeded budget expectations and contributed a profit to the Orbital consolidated results. Orbital is extremely pleased with the turnaround demonstrated by Synerject and is excited by its growth potential as a result of the restructuring.”
