Hexcel Corp. added carbon fiber manufacturing to its structural material capabilities with its recent acquisition of the composites products division of Hercules Inc. ``This acquisition will enable the company to extend its integration capabilities,'' John J. Lee, Hexcel chairman and chief executive officer, said in a statement.
Hexcel paid $135 million, subject to post-closing adjustments.
To fund the June 27 purchase and to refinance debt, Hexcel entered into a $310 million credit arrangement with a group of banks led by Credit Suisse, a subsidiary of CS Holding AG in Zurich, Switzerland. Hexcel ex-pects in July or August to offer $100 million of convertible subordinated notes, which will be used to pay down part of the withdrawals. Investment banks CS First Boston and Bear, Stearns Co. Inc. are presenting the convertible issue to European and U.S. institutional investors this month.
James Burns was named president of the new Hexcel fibers business unit, which consists of the graphite fiber facility in Magna, Utah, and the polyacrylonitrile precursor plant in Decatur, Ala. Burns had been business director of materials business with the Hercules division.
The preimpregnated material fiber operations in Magna will report to Hexcel's U.S. materials business unit, while the prepreg operation in Parla, Spain, will report to Hexcel's European materials business unit.
Hexcel has access to research facilities in Wilmington, Del., where Hercules is based, but those capabilities eventually will move to another Hexcel location.
A significant majority of the 170 members of the Oil, Chemical and Atomics Workers Union at Magna voted June 24 to reject Hexcel's wage and benefit proposal. Hexcel believes the offer was ``highly competitive for the Salt Lake City area,'' said Stephen Forsyth, Hexcel senior vice president of finance and administration.
Hexcel has offered employment to virtually all of the 450 employees in the composites products division.
The transaction continues the dramatic change for Hexcel, which emerged from bankruptcy protection in February 1995. Pleasanton, Calif.-based Hexcel's 1995 profit was $2.7 million on sales of $350 million.
On Feb. 29, Hexcel acquired Ciba-Geigy Ltd.'s composites unit. Now Ciba of Basel, Switzerland, owns 49.9 percent of Hexcel.
Including the Ciba and Her-cules businesses on a pro forma basis, Hexcel would have recorded 1995 sales of $771 million, according to a June 12 filing with the Securities and Exchange Commission. In 1995, the Ciba composites business lost $18.5 million on sales of $331 million, and the Hercules business had a profit of $5.6 million on sales of $100 million.
The same statement said Hexcel's debt as a percentage of capitalization would be 60.6 percent after the Hercules transaction, up from 42.6 percent as of March 31. The convertible issue will place the debt on a seven-year term, maintaining the debt-to-equity ratio until the conversion to common stock, Forsyth said.