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Siemens steps in to rescue Robicon from bankruptcy

01 May, 2005

Siemens has stepped in to rescue the troubled medium voltage drives supplier, Robicon, from Chapter 11 bankruptcy in the US. Siemens is paying around $197.5m in cash for Robicon`s assets, including the stock of its subsidiaries in the UK (the former Hill Graham Controls), China, Brazil and Canada. Robicon claims to be the world`s largest supplier of MV AC drives.

Robicon`s parent, High Voltage Engineering (HVE) has been suffering from financial problems for several years. It emerged from an earlier period of Chapter 11 protection last summer, only to announce that that it was filing for bankruptcy in February this year. The decision was forced on the company by "insufficient liquidity" from its subsidiaries` cashflows, and by its inability to find other sources of funding. The filing excluded HVE`s international subsidiaries.

Stephen Gray, Robicon`s Chapter 11 trustee, has picked Siemens Energy and Automation as the preferred "stalking horse" bidder over other contenders, arguing that the Siemens deal offers the best value for creditors, as well as providing security and stability for Robicon`s employees, customers, suppliers and partners.

Siemens wants to expand its MV drives business and Robicon`s portfolio is said to be complementary to its own. Siemens says it plans to continue to operate from Robicon`s Pittsburgh, Pennsylvania headquarters and to retain its employees.

The deal is subject to the US Bankruptcy Court approving of Siemens as a stalking horse bidder in a competitive auction process, and to regulatory approvals, including the clearance of the deal under anti-trust rules.

In 1999, HVE bought Italy`s Ansaldo Sistemi Industriali (ASI) from Finmeccanica to create ASI Robicon. The deal included ASI`s UK subsidiary, Hill Graham Controls, based in High Wycombe. Other members of the HVE group include the California-based Evans Analytical Group and an HVE operation in the Netherlands.

Robicon`s current product portfolio includes: MV AC drives up to 20MW; LV AC drives from 0.37kW-4.2MW; DC drives from 30A-20kA; power control systems, including active harmonic filters; AC and DC motors and generators, including induction, explosion-proof, high-speed and synchronous machines; SCR power controllers; and automation systems.

Last December, Robicon announced what it claimed was the first variable frequency drive capable of producing output voltages up to 14.4kV without needing a step-up transformer. A single Harmony HV drive can control induction and synchronous motors up to 34MW and, by running the drives in parallel, output powers of 130MW or higher are possible.

A Siemens bid to acquire 73.5% of Russia`s largest electrical engineering manufacturer, Power Machines, has been blocked. Russia`s Federal Anti-Monopoly Service rejected the bid on the grounds that it would limit competition in the energy equipment market, but there were also fears in Russia that the deal could limit the country`s military potential because Power Machines receives many defence contracts.




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