LONDON (Reuters) - Britain's Rolls-Royce agreed to sell its Bergen Engines unit to Russia-based TMH Group for net proceeds of 150 million euros ($180 million), making initial progress with a disposal plan aimed at helping it survive the pandemic.
The aero engines-maker is aiming to raise 2 billion pounds in total from asset sales, and the disposal of Norwegian-based Bergen announced on Thursday follows that of another small business, its civil nuclear instrumentation unit, last December.
COVID-19 has shattered Rolls-Royce's finances because it is paid by airlines on a flying-hours basis, and the company warned last week that travel would be even more constrained than it expected this year, meaning higher cash outflows.
WATCH: Rolls-Royce downgrades 2021 outlook
The major part of Rolls-Royce's disposal plan will be the sale of its Spain-based ITP Aero. Analysts have said smaller units would make up the remainder of the disposal target.
"The sale of Bergen Engines is a part of our ongoing portfolio evaluation to create a simpler, more focused group and contributes towards our target to generate at least 2 billion pounds from disposals," Rolls-Royce CEO Warren East said.
From its factory in Norway, Bergen makes medium speed gas and diesel engines for marine and power generation customers and employs about 950 people. It generated revenues of 239 million pounds in 2019, said Rolls-Royce.
TMH Group is a supplier of rail rolling stock and will fold Bergen into its TMH International branch, said the Rolls-Royce statement.
WATCH: Easy budgeting tips for when you leave home
(Reporting by Sarah Young; editing by Estelle Shirbon)