BRP selling EMM plant to Orbital

[SEAHORSE]

PERTH, Australia, Nov. 10 /PRNewswire-FirstCall/

-- Orbital Corporation
Limited today announced that Synerject, its 50:50 joint venture with Siemens
VDO Automotive Corporation, has signed a letter of intent with BRP US Inc. for
the purchase of BRP's engine management modules facility in Delavan,
Wisconsin, USA. It is expected that the transaction, which comprises the
investment in working capital assets, should be finalised by 31st January
2006.
BRP US Inc. is a wholly-owned subsidiary of Bombardier Recreational
Products Inc. (BRP), a privately-held company and a world leader in the
design, development, manufacturing, distribution and marketing of motorised
recreational vehicles. Its portfolio of brands and products includes:
Ski-Doo(R) and Lynx(TM) snowmobiles, Sea-Doo(R) watercraft and sport boats,
Johnson(R) and Evinrude(R) outboard engines, direct injection technologies
such as Evinrude E-TEC(TM), Bombardier* ATV all-terrain vehicles, Rotax(R)
engines and karts.
The facility to be acquired manufactures fuel injectors and engine
management modules for Evinrude(R) and Johnson(R) outboard engines. As part of
the transaction, Synerject will continue to supply BRP's Johnson and Evinrude
division through long-term supply contracts.
The acquisition will generate a minimum annualised increase in Synerject's
turnover of US$15m with significant, identified growth prospects for the
future. The facility will be profitable from the date of acquisition and over
the medium term is expected to achieve profit margins consistent with those of
Synerject's current business. The transaction is a milestone in the
implementation of Synerject's strategic growth plan and presents Synerject
with a significant diversification opportunity, allowing it to increase both
its product offerings and skill base.
Orbital's Chief Executive Officer, Rod Houston said "Clearly this
transaction is significant for Synerject and will complement its existing
business. From Orbital's perspective, it is a major step in consolidating the
turnaround of our business and shareholders will benefit from increased value
created in a growing Synerject."
Synerject, headquartered in Newport News, Virginia with additional offices
in France was formed in 1997 as a joint venture between Orbital Corporation
Limited and Siemens VDO Automotive Corporation. Synerject supplies engine
management systems, modules and components for the marine, recreational,
motorcycle and industrial markets.

More information on Synerject can be found at http://www.synerject.com

Orbital is an international developer of engine and related technologies,
providing research, design and development services for the world's producers
of powertrains and engine management systems for application in motorcycles,
marine and recreational vehicles, automobiles and trucks. Orbital's principal
operations in Perth, Western Australia, provide a world class facility with
capabilities in design, manufacturing, development and testing of engines and
powertrains unparalleled in the Asia Pacific region. Orbital provides its
customers with leading edge, world class, engineering expertise.
Headquartered in Perth, Western Australia, Orbital stock is traded on the
Australian Stock Exchange (OEC) and, in the United States, on the OTC Bulletin
Board (OBTLY).

[johnrude]

I dont like the sounds of this. What does everyone else think??

[RUSTY63]

I feel its a good move, they already supply EMM's and we have very few if any problems with these parts, this can only help with the research and development of better parts for the motors in the future.

[ChampioNman]

From what I remember Orbital does the Merc ECU's and OPTI technology. They have been around for a long time. Shouldn't effect the motors, but the people that build them are going to be out of work .

[johnrude]

I just do not like the fact that they are now loosing there quality control on these items. If im not mistaken didnt OMC do this and it turned out to be a nightmare with some of there parts? I hope it will be plus for us but I dont like to see news like this.

[santee bass]

I wonder that by this sale,Will Merk be able to buy this BRP technology from the new owner for their use?

[Stump]

Great....my EMM goes dead the same week they sell off that division.

[SEAHORSE]

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote, originally posted by Stump &raquo;</TD></TR><TR><TD CLASS="quote">Great....my EMM goes dead the same week they sell off that division. </TD></TR></TABLE>

Yep, too bad the new one will be painted black and have a small belt driven air-compressor mounted on it!

[jimh]

Did the Delavan, Wisconsin, plant manufacture the E-TEC injectors?


Modified by jimh at 7:11 PM 11/11/2005

[ChampioNman]

Local buddy of mine that I worked on his motor, made the injectors for OMC when the Fichts first came out and they were left holding the bag. dompany absorbed the loss but had a bunch of injectors to ship and they lost a bunch of $$$. Hope the folks in Delvan don't loose their jobs. Yep I can hear the whoop, whoop of the Orbital on an E-tec NOT! I've told the Merc guys to carry an extra belt when the compressor belt breaks , they don't believe me untill it happens .

[jimh]

Re: Did the Delavan plant manufacture E-TEC injectors?

Is that a "no"?

[johnrude]

Well the way Mercury is going they will just buy Orbital break the contract with BRP and stop shipping BRP the parts needed.

[Bassmeister]

I'm like JohnRude, it takes qc out of BRP's hands!

[Won Hunglo]

Expect production to move to China with this deal.

[Bassmeister]

Yea and prices continue to increase!!!!

[jimh]

For more news on the sale of the Delavan manufacturing plant to Synerject, see my article:

http://continuouswave.com/ubb/...lavan

[RUSTY63]

Thanks Jim, That is a Good article.

[SEAHORSE]

Here is an interview with the CEO and CFO of Synerjet by the Austrailian news service:


PERTH, Australia, Nov. 14 /PRNewswire-FirstCall/ --

Record of interview:

corporatefile.com.au:
Orbital Corporation Limited recently announced an agreement by
Synerject,
your US-based 50:50 joint venture with Siemens VDO Automotive, to acquire
the
engine management modules facility of Bombardier Recreational Products (BRP)
in Delavan in the US state of Wisconsin. What's the rationale behind this
acquisition?

CEO Rod Houston:
The facility is complementary to Synerject's core business of
manufacturing and supplying engine management modules for the non-automotive
market. It will bring a significant increase in revenue and make a material
contribution to Synerject's growth. We also believe Synerject can overlay
its
production experience adding value to this facility.
The acquisition will diversify Synerject's customer base and the
increased
scale of the business should improve the confidence of other customers and
assist in winning new business.

corporatefile.com.au:
The plant supplies fuel injectors and engine management modules for
BRP's
Johnson and Evinrude outboard engines. To what extent do these products
compete directly with Synerject's existing products?

CEO Rod Houston:
These products have application in Synerject's existing marine market,
however they have their own customer loyalties so we see this as additional
rather than competing business. Synerject will actively support existing
and
new products and sees growth prospects for all business segments.

corporatefile.com.au:
Following the acquisition, what will be Synerject's position with
regards
to use of BRP's E-TEC direct injection technology?

CEO Rod Houston:
The transaction involves only assets relating to the manufacture of the
fuel injectors and engine management modules. There'll be no transfer of
intellectual property rights for E-TEC to Synerject. Synerject continues to
have the exclusive rights to the OCP system and this continues to be a key
focus of Synerject.

corporatefile.com.au:
Synerject had revenue of US$42 million in the year ended June 2005 and
the
Delavan facility is expected to immediately increase turnover by more than
US$15 million on an annualised basis. You've also noted opportunities to
grow
revenue from the facility going forward. What are the growth opportunities
and to what extent are they provided for under the long-term supply
contracts
Synerject will enter into with BRP's Johnson Evinrude division?

CEO Rod Houston:
BRP's E-TEC volume sales are increasing as it switches more and more of
its Johnson and Evinrude outboards away from the traditional carburettor
engines. Hence there are very good growth opportunities for this facility
and
Synerject as it keeps pace with this change-over.

corporatefile.com.au:
Over the medium term you expect the facility to achieve profit margins
consistent with those of Synerject's current business, which on the 2005
result had a net profit margin of about 9 percent. In which specific areas
do
you expect to improve the facility's earnings performance?

CFO Keith Halliwell:
There's a number of areas where we see improvements going forward. The
first being increased sales and therefore improved overhead recovery. The
second area is purchasing price reductions through utilising Synerject's
supply arrangements. We also believe we can introduce some of Synerject's
production experience, which will help improve the performance of the plant.

corporatefile.com.au:
Synerject booked an after-tax profit of US$3.9 million in the 2005
financial year and you expect the acquisition to make a positive
contribution
to Synerject's earnings from day one. What's the expected profit
contribution
in the current year ending June 2006 and in the first full year post
acquisition, i.e., the 2007 financial year?

CFO Keith Halliwell:
We don't expect any significant profit contribution in the current
financial year, with the immediate focus on successful integration. In 2007
we'd expect double digit sales growth and look for the improvements we
talked
about coming through to the bottom line. It's difficult to put a figure on
it
but we'd expect the profit impact, compared with Synerject's present level
of
business, to be significant.

corporatefile.com.au:
At your recent AGM you indicated that Synerject would be adversely
affected in the current year by a major customer's decision to run down its
inventories of Synerject products and by cash costs relating to product
upgrades. In light of the Delavan plant acquisition, what are Synerject's
expected earnings for the current year?

CFO Keith Halliwell:
Despite the customer inventory reductions and product upgrade expense we
still expect Synerject to make a healthy contribution to our results this
year.

corporatefile.com.au:
Synerject's investment in the Delavan facility will equate to the
business's working capital assets. How will Synerject fund the acquisition
and how will it impact Synerject's debt repayment schedule?

CFO Keith Halliwell:
Synerject has sufficient cash on hand to support the working capital
needs
of this expanded business and also meet the requirements of its present debt
reduction program.

corporatefile.com.au:
At your AGM you said your strategic goal for Synerject is to grow annual
sales to over US$200 million by 2010. Following the Delavan plant
acquisition
can Synerject achieve this goal via organic growth? What further
developments
will be necessary for it to reach the target?

CEO Rod Houston:
We expect Synerject's growth to come from a mixture of organic growth
and
growth by acquisition. We also see that some of the major growth
opportunities will be in India and China and these are already being
investigated by Synerject. As I indicated at the AGM, Synerject is already
investigating the potential start-up of manufacturing capacity in China for
its future products.

corporatefile.com.au:
Thank you Rod and Keith

[johnrude]

I just talked to BRP today. I can fully understand why and back them 100% on this sale. As we all know BRP gives 100% to there product. If you can only give 90%, find someone that can give you 100%. All parts are tested and there are strick contracts with everything. This is only going to make the Evinrude systems much better with better quality. This is what this company does. If you want the best of something you find the best and get them onboard. I believe this is just what they done.

[Bassmeister]

Yea but Americans won't be building em for long!