Avon Protection (LON: AVON) said Friday that the US Defense Logistics Agency (DLA) has exercised the first of the two one-year extension options under the DLA Enhanced Small Arms Protective Inserts body armor contract.
The exercise of the option extends the contract to 22 September 2022 and triggers a minimum order value for the option year of $19 million.
In addition, it triggers a further $3 million of contingent payment, payable to 3M under the terms of the acquisition of the Ceradyne ballistic protection business.
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The total consideration payable to date is $7 million. Upon receipt of further orders over the minimum order value of $19 million, additional compensation will become payable, with the maximum total contingent consideration payable to 3M being $25 million.
Paul McDonald, CEO of Avon, said: “I am pleased with the progress the business has made since December to address the delays experienced in obtaining DLA ESAPI product approval.
“This contract extension demonstrates our ongoing position as a leading supplier of body armor to the U.S. armed forces, as well as underpinning our FY22 body armor revenue expectations.”
Avon Protection shares are up 8.48% at 2,092p so far on Friday.
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