Avon Protection Share News (AVON)

(Sharecast News) - Avon Rubber announced a competitively-awarded firm fixed price contract to supply the United States Defense Logistics Agency with 'enhanced small arms protective inserts' (ESAPI) body armour plates on Wednesday.
The FTSE 250 company said the body armour plates were a legacy product of 3M's Ceradyne ballistic-protection business, which was acquired on 2 January.

It said the framework contract had a maximum value of $333m over a three-and-a-half-year duration, being an 18-month base contract with two further one-year extension options.

The contract had a minimum value of $19m.

Avon said the first order under the contract was expected "shortly", with deliveries set to begin early in 2021.

The company said it would invest up to $5m in capital expenditure across financial years 2020 and 2021 to obtain product approvals, and to expand production capacity.

It said the successful award of the contract triggered $3 million of the contingent consideration payable to 3M under the terms of the acquisition, as announced on 7 August.

Additional contingent consideration would become payable on receipt of orders under the contract, with the maximum total contingent consideration payable to 3M being $25m.

"This is another significant, multi-year body armor contract for Avon Protection in addition to the two existing US Army 'vital torso protection' (VTP) contracts and represents further encouraging momentum in our newly acquired ballistic protection business," said chief executive officer Paul McDonald.

"This further strengthens the medium term outlook and visibility for Avon Protection and demonstrates our ongoing position as a leading provider of body armor to the US armed forces."