Cobham Regulatory News (COB)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING IN IT SHALL CONSTITUTE AN OFFERING OF ANY SECURITIES. ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY PROVISIONAL ALLOTMENT LETTER, NIL PAID RIGHTS, FULLY PAID RIGHTS, AND/OR NEW ORDINARY SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED.

1 June 2016

1 for 2 fully underwritten £506.7 million Rights Issue

On 26 April 2016, Cobham plc (the Company or Cobham and, together with its subsidiaries, the Group) announced that it intended to carry out a rights issue (the Rights Issue) of new ordinary shares (the New Ordinary Shares) in the second quarter of 2016.

The Board of Directors of Cobham (the Board) today confirms that it intends to raise £506.7 million (before expenses) by way of the Rights Issue. The Prospectus containing full details of the Rights Issue is expected to be made available on http://www.cobhaminvestors.com later today.

Details of the Rights Issue

· 1 for 2 fully underwritten Rights Issue of 569,287,950 New Ordinary Shares to raise gross proceeds of £506.7 million (approximately £487 million net of expenses)

· The issue price of 89 pence per New Ordinary Share represents a discount of 45.4% to the Closing Price on 31 May 2016, and a 35.7% discount to the theoretical ex-rights price of 138.3 pence per New Ordinary Share calculated by reference to the Closing Price on the same basis

· The Rights Issue is fully underwritten by BofA Merrill Lynch and Jefferies International Limited and is not subject to shareholder approval

· The Directors intend to take up in full the New Ordinary Shares to which they are entitled under the Rights Issue

Reasons for the Rights Issue

· Since 2014 a combination of the increase in net debt, constraints on cash generation and adverse factors impacting the Group's level of EBITDA generation as well as the slow start in first quarter 2016 trading means that by 30 June 2016, the Group's next lending covenant testing date, net debt to EBITDA could be around the covenant ratio of 3.5x

· In light of this the Board is planning to reduce the Group's indebtedness through the Rights Issue, which it believes to be in shareholders' best interests

· The Group's long term success is dependent upon its ability to continue to make targeted investments across its leading technologies and position itself on development programmes, which will deliver long term streams of revenue and cash, once engineering and development is completed and production commences

· Reducing the indebtedness of the Group will allow management to focus on bringing the Group's development programmes to production and insulate the Group against short-term market headwinds, while continuing its focus on operational efficiency and working capital improvement

Dividend

· As announced on 26 April 2016, the Board of Cobham confirms its intention to pay a rebased total dividend in respect of 2016 which is equal in absolute quantum to the £126 million dividend announced for 2015

· This quantum will be paid over the total share capital, as enlarged by the Rights Issue, with the additional shares first qualifying for the 2016 interim dividend to be paid on 4 November 2016. The total dividend in respect of 2016 equates to approximately 7.4 pence per share based on the enlarged share capital

Bob Murphy, Chief Executive Officer, said:

"The Rights Issue will put Cobham on a sound financial footing by reducing gearing towards its target of below 2x net debt to EBITDA. The Board confirms the outlook for the year ended 31 December 2016 remains consistent with the 26 April 2016 announcement. We remain confident that continued investment in technology and know-how will enable us to maintain our leading positions in specialist markets with good prospects leaving Cobham well placed to deliver growth over the medium term."

Abridged expected timetable of principal events

Interim Results

The Group's interims results will be announced on 4 August 2016.

Prospectus

· The Prospectus containing full details of the Rights Issue is expected to be made available on http://www.cobhaminvestors.com later today

· The Prospectus will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/nsm following publication

The preceding summary should be read in conjunction with the full text of the following announcement and its appendices, together with the Prospectus. Capitalised terms used in this announcement shall have the meanings set out in the Appendix.

- ends -

About Cobham

The Group is an international technology and services company, employing around 11,000 people across five continents with customers and partners in over 100 countries. The Group offers a range of technologies and services to solve challenging problems across commercial, defence and security markets. It has strong market positions in air-to-air refuelling; aviation services; wireless; audio, video and data communications, including satellite communications; defence electronics; life support and mission equipment.

Cautionary Statements

The defined terms set out in the Appendix apply in this announcement.

This announcement has been issued by and is the sole responsibility of Cobham. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

This announcement is an advertisement and not a prospectus and not an offer of Nil Paid Rights, Fully Paid Rights or New Ordinary Shares for sale in any jurisdiction, including in or into the United States, Australia, Canada, Dubai International Financial Centre, Guernsey, Isle of Man, Jersey, Japan, New Zealand, Singapore, Switzerland, South Africa or any jurisdiction where the availability of the Rights Issue (and any other transactions contemplated in relation to it) would breach any applicable laws or regulations (each an Excluded Territory).

Neither this announcement nor anything contained in it shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not acquire any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of the information contained in the Prospectus to be published by Cobham in connection with the Rights Issue.

Copies of the Prospectus will, following publication, be available from Cobham plc, Brook Road, Wimborne, Dorset BH21 2BJ and on Cobham's website at http://www.cobhaminvestors.com. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

The distribution of this announcement, the Prospectus, the Provisional Allotment Letter, and the offering or transfer of Nil Paid Rights, Fully Paid Rights or New Ordinary Shares into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement, the Prospectus, the Provisional Allotment Letter and/or any accompanying documents comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, this announcement, the Prospectus (once published) and the Provisional Allotment Letters (once printed) should not be distributed, forwarded to or transmitted in or into the United States or any other Excluded Territory.

Recipients of this announcement and/or the Prospectus should conduct their own investigation, evaluation and analysis of the business, data and property described in this announcement and/or the Prospectus. This announcement does not constitute a recommendation concerning any investor's options with respect to the Rights Issue. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

This announcement is not and does not contain an offer of securities for sale or a solicitation of an offer to purchase or subscribe for securities in the United States or any other Excluded Territory, or any other state or jurisdiction in which such release, publication or distribution would be unlawful. The securities to which this announcement relates (the Securities) have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from, or a transaction not subject to, registration under the Securities Act. There will be no public offer of the Securities in the United States or any other jurisdiction. Subject to certain exceptions, the Securities may not be offered or sold in any Excluded Territory or to, of for the account or benefit of any national, resident or citizen of such countries.

Accordingly, subject to certain exceptions, the Rights Issue is not being made in the United States and neither this announcement, the Prospectus nor the Provisional Allotment Letters constitute or will constitute an offer, or an invitation to apply for, or an offer or an invitation to subscribe for or acquire any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the United States. Subject to certain limited exceptions, Provisional Allotment Letters have not been, and will not be, sent to, and Nil Paid Rights have not been, and will not be, credited to the CREST account of, any Qualifying Shareholder with a registered address in or that is located in the United States.

The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.

Jefferies International Limited (Jefferies), which is authorised and regulated in the United Kingdom by the UK Financial Conduct Authority (FCA), and Merrill Lynch International (BofA Merrill Lynch), which is authorised by the Prudential Regulation Authority (PRA) and regulated in the United Kingdom by the PRA and FCA, are acting exclusively for Cobham and no one else in connection with the Rights Issue, and will not regard any other person (whether or not a recipient of this announcement) as their respective clients in relation to the Rights Issue and will not be responsible to anyone other than Cobham for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue referred to in this announcement or any other transaction, arrangement or matter referred to in this announcement.

No action has been taken by the Company, BofA Merrill Lynch or Jefferies that would permit an offering of the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or possession or distribution of this announcement, the Prospectus, the Provisional Allotment Letter or any other offering or publicity material relating to the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company, BofA Merrill Lynch and Jefferies to inform themselves about, and to observe, such restrictions.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by BofA Merrill Lynch or Jefferies or their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other information made available to or publicly available to any interested party or its advisers, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, and any liability therefore is expressly disclaimed.

In connection with the proposed rights issue, BofA Merrill Lynch, Jefferies and any of their affiliates, may in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. Accordingly, references in the Prospectus to the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, BofA Merrill Lynch, Jefferies and any of their affiliates acting in such capacity. In addition BofA Merrill Lynch, Jefferies and any of their affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which BofA Merrill Lynch, Jefferies and any of their affiliates may from time to time acquire, hold or dispose of Ordinary Shares. BofA Merrill Lynch, Jefferies do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Forward-Looking Statements

This announcement contains 'forward-looking statements' with respect to the financial condition, results of operations and business of Cobham and to certain of Cobham's plans and objectives with respect to these items.

Forward-looking statements are sometimes but not always identified by the use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal', or 'estimates'. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future.

There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which the Group operates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes in the regulatory or competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; changes to or delays in programmes in which the Group is involved; the completion of acquisitions and divestitures and changes in commodity prices, inflation or exchange rates.

All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Cobham or any other member of the Group or persons acting on their behalf, are expressly qualified in their entirety by the factors referred to above. Neither Cobham nor any other person (including BofA Merrill Lynch and Jefferies) intends to update these forward-looking statements.

You are advised to read this announcement and the Prospectus (once published) in their entirety for a further discussion of the factors that could affect Cobham's future performance. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

No statement in this announcement is intended as a profit forecast and no statement in this announcement should be interpreted to mean that underlying operating profit for the current or future financial years would necessarily be above a minimum level, or match or exceed the historical published operating profit or set a minimum level of operating profit.

1 for 2 fully underwritten £506.7 million Rights Issue

1. Introduction

On 26 April 2016, Cobham announced that it intended to carry out a rights issue in the second quarter of 2016.

The Board today confirms that it intends to raise £506.7 million (before expenses) by way of a rights issue.

The Board believes the Rights Issue to be in the best interests of Cobham and the Shareholders as a whole.

The Rights Issue is fully underwritten by Jefferies and BofA Merrill Lynch, subject to the terms of the Underwriting Agreement.

1.1 Background to the Rights Issue

In May 2014, the Group entered into an agreement to acquire Aeroflex, and completion of this acquisition took place on 12 September 2014. At the time of the acquisition of Aeroflex, the Board decided to raise equity via a cash placing to maintain its leverage ratio at approximately 2.5x net debt to EBITDA. The Group was expected to deleverage thereafter leading to a balance sheet target of 2.1x by the 2015 year end.

However, following the Aeroflex acquisition, the Group's leverage ratio did not reduce as expected and by year end 2015 it had reached 2.9x net debt to EBITDA. This was caused by a number of factors which have constrained cash generation and adversely impacted Group EBITDA. At the same time debt has increased in part due to the strengthening of the U.S. dollar against sterling. Approximately 90 per cent. of the Group's gross debt is denominated in U.S. dollars and the strengthening of the U.S. dollar against sterling increased net debt since the Aeroflex acquisition by approximately £162 million, which in isolation increased the Group's net debt to EBITDA ratio by 0.4x.

In defence and security markets, constraints on cash generation and factors impacting Group EBITDA include:

· Ongoing investment in the Group's engineering and development programmes, including investment in multi-year aerial refuelling development programmes in the Mission Systems Sector and major electronics upgrade programmes in the Advanced Electronics Solutions Sector. There is significant ongoing investment in the Group's balance sheet related to these activities, which will be invoiced to customers over time, and cash subsequently collected, on achievement of contractual milestones. Cobham continues to make good progress on key programmes, with low rate initial production now commencing on the A400M aircraft and the KC‑46 aircraft being in flight test phase. In aggregate the Group's development programmes are expected to deliver significant long-term cash and revenue streams, once engineering/development is completed and production commences; and

· Investment in increased levels of capital expenditure to support new contract wins, in particular the Australian Maritime Safety Authority contract for airborne search and rescue. This contract has a value of A$640 million over 12 years, excluding three optional years. Cobham will invest an expected A$110 million, including the purchase and modification of four aircraft; the bulk of this being incurred over 2015 and 2016. Flying operations will commence later this year.

In commercial markets, the Group experienced unexpected and significant market headwinds in some of its short cycle commercial markets, adversely impacting earnings and cash. These include the Group's marine SATCOM and Wireless businesses with subdued market conditions being driven primarily by reduced underlying demand in Asia-Pacific, weakness in global oil and gas markets and reduced levels of research and development expenditure by prospective customers in wireless test markets. In addition, this resulted in a £42 million build-up in working capital at the 2015 year end, as conditions deteriorated rapidly. Excess inventory on hand at the 2015 year-end has now largely been shipped and the Group continues to focus on achieving sustainable improvements in working capital levels. The Group remains positive on the medium-term macro growth prospects for its communications markets.

1.2 First Quarter 2016 Trading

As set out in the announcement on 26 April 2016, first quarter trading was behind the Board's expectations with the Group's trading profit being £15 million (2015: £50 million). There were three principal reasons for this slow start: operational issues in the Wireless business resulting in delayed shipments and a one-off charge of £9 million; increasing headwinds in the commercial fly-in fly-out business; and deferred revenue on a small number of development programmes in the Advanced Electronics Solutions Sector. The remainder of the Group continues to trade in line with the Board's expectations, with the order book slightly ahead of the year-end position on a like-for-like basis at the end of the quarter.

The biggest adverse impact on underlying trading was in the Wireless business, where there were operational issues and delayed shipments to customers. Following a detailed operational review, Cobham decided to record a one-off £9 million charge within the Group's first half trading profit. The charge includes some additional liabilities relating to 2015 shipments and adjustments which reflect the reassessment of some accounting policies. The Group has acted to strengthen internal controls in the business and has made changes to strengthen its operational and financial management leadership teams. The Wireless order book at the end of the quarter was ahead of the prior year comparative and this, together with the recovery from the first quarter shipment issues and increased momentum in relation to the in-building wireless order opportunity pipeline, is anticipated to result in improved trading in the business as the year progresses.

Cobham also saw increasing headwinds in its commercial fly-in fly-out business in its Aviation Services Sector towards the end of the first quarter, with certain natural resources customers in Australia slowing-down their operational activities and increased competition. This development resulted in reduced flying activity in this market. In response to the increasing headwinds the business proactively removed costs, including reducing the number of aircraft and making reductions in other direct and indirect costs.

Within Cobham's Advanced Electronic Solutions Sector, a combination of technical and supplier quality issues resulted in deferred revenue on a small number of development programmes in the first quarter. Cobham is working through these issues and expects improved performance and recovery through the year.

1.3 Reasons for the Rights Issue

The combination of the increase in net debt, constraints on cash generation and adverse factors impacting the Group's level of EBITDA generation following the acquisition of Aeroflex as well as the slow start in first quarter trading means that, while the Group has significant headroom within its interest cover covenants in its financing documents, by 30 June 2016, the Group's next lending covenant testing date, net debt to EBITDA could be around the covenant ratio of 3.5x. In light of this the Board is planning to reduce the Group's indebtedness through the Rights Issue, which it believes to be in Shareholders' best interests.

The Group's long term success is dependent upon its ability to continue to make targeted investments across its leading technologies and position itself on development programmes, which will deliver long term streams of revenue and cash, once engineering and development is completed and production commences. Reducing the indebtedness of the Group will allow management to focus on bringing the Group's development programmes to production and insulate the Group against short-term market headwinds, while continuing its focus on operational efficiency and working capital improvement.

The Board has considered alternative options before deciding to pursue the Rights Issue, including seeking amendments to the Group's covenants under the terms of its borrowing facilities without undertaking an equity capital raising, further asset disposals, cutting or suspending the Group's dividend to shareholders and a smaller equity placing of shares on a non-preemptive basis. The Board has determined that the Rights Issue is in the best interest of the Group as it reduces leverage to a more sustainable level, which will safeguard the Group's operational and financial flexibility. The Board considers that the Group's target level of gearing should be below 2.0x net debt to EBITDA. The Rights Issue will reduce gearing towards this level, with future free cash flow generation anticipated to allow the Group to continue to delever over time whilst continuing to meet its capital allocation commitments, including necessary internal investment and dividend payments.

2. Further actions to be taken by the Group

Cobham is reviewing its Group-wide cost structures, targeting run-rate net savings of approximately £30 million per annum by 31 December 2016, with anticipated net savings of £10 million to be delivered in 2016. This will aid mitigation of trading margin pressure and support delivery of the Board's earnings expectations and the generation of future free cash flow, which will underpin further deleveraging over the medium term. The savings will be achieved from a combination of restructuring areas of demand weakness, increasing the Group's outsourcing of manufacturing and reducing the Group's overheads. The costs of achieving the savings are included in the net savings figures quoted above and will be recognised largely in Cobham's underlying trading profit, with no additional non-underlying charges anticipated.

3. Use of proceeds

The Rights Issue is expected to raise £506.7 million in gross proceeds.

Of the expected approximately £487 million of net proceeds from the Rights Issue, the Group currently intends to redeem or repurchase U.S. Private Placement Notes and repay other borrowings totalling approximately £467 million, with the balance of the net proceeds to be used for make-whole premiums pursuant to the terms of the U.S. Private Placement Notes. However, the Board will continue to evaluate whether there are more financially advantageous ways to pay down debt.

4. Financial impact of the Rights Issue

The Rights issue is expected to reduce the Group's pro forma net debt to EBITDA ratio from 2.9x as reported at 31 December 2015, to around 2x taking into account the receipt of the net proceeds of the Rights Issue and the repayment of debt.

The Prospectus which is expected to be published later today will contain an unaudited pro forma statement of net assets that illustrates the effect of the Rights Issue and the repayment of debt on the Group's net assets as at 1 April 2016 as if the Rights Issue had been undertaken at that date.

5. Principal terms of the Rights Issue and underwriting commitments

Cobham is proposing to raise approximately £487 million (net of expenses) by way of the Rights Issue of 569,287,950 New Ordinary Shares. The Rights Issue is being fully underwritten by the Joint Underwriters, subject to certain customary conditions, on the basis set out in the Underwriting Agreement. The principal terms of the Underwriting Agreement will be summarised in Part XVII: "Additional Information" of the Prospectus. The Rights Issue Price of 89 pence per New Ordinary Share, which is payable in full on acceptance by no later than 11.00 a.m. on 16 June 2016, represents a 45.4 per cent. discount to the closing middle-market price of Cobham of 163.0 pence per Existing Ordinary Share on 31 May 2016, the last trading day prior to the date of this announcement, and a 35.7 per cent. discount to the theoretical ex-rights price of 138.3 pence per New Ordinary Share calculated by reference to the closing middle-market price on the same basis. If a Qualifying Shareholder does not take up any of his entitlement to New Ordinary Shares, his proportionate shareholding will be diluted by 33.3 per cent. However, if a Qualifying Shareholder takes up his New Ordinary Shares in full, he will, after the Rights Issue has been completed, and ignoring any fraction of an Ordinary Share, as nearly as practicable have the same proportionate voting rights and entitlements to dividends as he had on the Record Date.

If a Qualifying Shareholder does not subscribe for the New Ordinary Shares to which he is entitled, such Shareholder can instead sell his rights to those New Ordinary Shares and receive the net proceeds in cash. This is referred to as dealing in the rights "nil paid" and, subject to the fulfilment of certain conditions, dealings on the London Stock Exchange in the Nil Paid Rights are expected to commence at 8.00 a.m. on 2 June 2016.

Subject to the fulfilment of, among other things, the conditions set out below, Cobham will offer 569,287,950 New Ordinary Shares to Qualifying Shareholders at a Rights Issue Price of 89 pence per New Ordinary Share, payable in full on acceptance. The Rights Issue will be offered on the basis of:

1 New Ordinary Share for every 2 Existing Ordinary Shares

held by Qualifying Shareholders on the Record Date, and so in proportion to any other number of Existing Ordinary Shares then held and otherwise on the terms and conditions to be set out in Part IX: "Terms and Conditions of the Rights Issue" of the Prospectus. Qualifying Non-CREST Shareholders with registered addresses in the United States or in any of the other Excluded Territories will not be sent Provisional Allotment Letters and Qualifying CREST Shareholders in such territories will not have their CREST stock accounts credited with Nil Paid Rights, except where Cobham and the Joint Underwriters are satisfied that such action would not result in the contravention of any registration or other legal or regulatory requirement in such jurisdiction.

Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue. Fractions of New Ordinary Shares will not be allotted to any Qualifying Shareholders, but the Joint Bookrunners will endeavour to place the aggregated Nil Paid Rights in respect of such New Ordinary Shares in the market for the benefit of Cobham.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive in full all dividends and other distributions declared, made or paid by reference to a record date after the date of their issue.

The Rights Issue is conditional upon, among other things:

· Admission of the New Ordinary Shares (nil paid) becoming effective by not later than 8.00 a.m. on 2 June 2016 (or such later time and/or date as the parties to the Underwriting Agreement may agree, being not later than 6 June 2016);

· save to the extent that, in the sole opinion of the Joint Underwriters, would not be material in the context of the Rights Issue, Cobham having complied with its obligations under the Underwriting Agreement including the delivery of certain documents to the Sponsor and the Joint Underwriters, by the times and dates specified in the Underwriting Agreement;

· the warranties on the part of Cobham under the Underwriting Agreement being true, accurate and not misleading on the date of the Underwriting Agreement and immediately before Admission;

· no matter requiring a supplement to the Prospectus having arisen between the time of publication of the Prospectus and Admission and no such supplement being published by Cobham at any time before Admission; and

· in the opinion of the Joint Underwriters (acting in good faith), no material adverse change having occurred in respect of Cobham prior to Admission.

The results of the Rights Issue, including the aggregate amount raised is expected to be announced by Cobham to a Regulatory Information Service by 8.00 a.m. on 17 June 2016.

Applications have been made to the FCA for the New Ordinary Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its main market for listed securities. It is expected that Admission of the New Ordinary Shares, nil paid, will become effective and dealings (for normal settlement) in the New Ordinary Shares will commence, nil paid, at 8.00 a.m. on 2 June 2016.

The Existing Ordinary Shares are already admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities and to CREST. It is expected that all of the New Ordinary Shares, when issued and fully paid, will be capable of being held and transferred by means of CREST. The New Ordinary Shares will trade under ISIN GB00B07KD360 and the SEDOL number of the New Ordinary Shares will be B07KD36. The ISIN number for the Nil Paid Rights is GB00BZBVN521 and the ISIN for the Fully Paid Rights will be GB00BZBVN745.

6. Current trading and outlook

On 26 April 2016, Cobham made the following statement in relation to the Group's outlook:

Following the slow start in the first quarter, the Board now anticipates that Group underlying trading profit will be approximately £15m below its previous expectations for the full year. This is primarily due to a combination of the impact of increased headwinds in the commercial fly-in fly-out business in Australia together with the one-off charge of £9m in Wireless and short-term resolution of operational issues. The Board also expects there will be a more pronounced earnings bias to the second half of the year.

The Board confirms the outlook for the year ended 31 December 2016 remains consistent with the 26 April 2016 announcement.

7. Dividend

The Board confirms its intention to pay a rebased total dividend in respect of 2016 which is equal in absolute quantum to the £126 million dividend announced for 2015. This quantum will be paid over the total share capital, as enlarged by the Rights Issue, with the additional shares first qualifying for the 2016 interim dividend to be paid on 4 November 2016. The total dividend in respect of 2016 equates to approximately 7.4 pence per share based on the enlarged share capital.

The Board believes that over time the Group's ability to convert a high proportion of its earnings into cash is unchanged and therefore it remains committed to its stated dividend policy, which is broadly to align future dividend increases with underlying earnings growth, while rebuilding cover over time.

8. Overseas shareholders

The attention of Qualifying Shareholders who have registered addresses outside the United Kingdom, or who are citizens or residents of countries other than the United Kingdom, or who are holding Ordinary Shares for the benefit of such persons (including, without limitation, custodians, nominees, trustees and agents) or who have a contractual or other legal obligation to forward the Prospectus, a Provisional Allotment Letter and any other document in relation to the Rights Issue to such persons, is drawn to the information which will appear in paragraph 7 of Part IX: "Terms and Conditions of the Rights Issue" of the Prospectus. In particular, subject to certain very limited exceptions, the Rights Issue is not being made to Shareholders in the United States or into any of the other Excluded Territories.

Notwithstanding any other provision of the Prospectus or the Provisional Allotment Letter, the Company reserves the right to permit any Qualifying Shareholder to take up his rights if the Company and the Joint Underwriters in their absolute discretion are satisfied that the transaction in question will not violate applicable laws.

The Company has made arrangements under which the Joint Underwriters will try to find subscribers for the New Ordinary Shares provisionally allotted to such Shareholders (and other Shareholders who have not taken up their rights) by 4.30 p.m. on the second dealing day after the last date for acceptance of the Rights Issue. If the Joint Underwriters find subscribers and are able to achieve a premium over the Rights Issue Price and the related expenses of procuring those subscribers (including any applicable brokerage and commissions and amounts in respect of VAT which are not recoverable), such Shareholders will be sent a cheque for the amount of that aggregate premium above the Rights Issue Price less related expenses (including any applicable brokerage and commissions and amounts in respect of VAT which are not recoverable), so long as the amount in question is at least £5. If any person in the United States or any other Excluded Territory receives a Provisional Allotment Letter, that person should not seek to, and will not be able to, take up his rights thereunder, except as described in paragraph 7 of Part IX: "Terms and Conditions of the Rights Issue" of the Prospectus. The provisions of paragraph 6 of Part IX: "Terms and Conditions of the Rights Issue" of the Prospectus will apply to Overseas Shareholders who cannot or do not take New Ordinary Shares provisionally allotted to them.

Persons who have registered addresses in or who are resident in, or who are citizens of, countries other than the United Kingdom should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements to the Rights Issue.

9. Board recommendation

The Board believes the Rights Issue to be in the best interests of Cobham and the Shareholders as a whole.

The Directors who hold in aggregate 257,510 Existing Ordinary Shares, representing 0.02 per cent. of Cobham's existing issued ordinary share capital as at 31 May 2016 (being the latest practicable date prior to publication of this announcement) intend to take up in full the New Ordinary Shares to which he or she is entitled under the Rights Issue.

APPENDIX

DEFINITIONS

The following definitions shall apply throughout this announcement unless the context requires otherwise: