Andrzej Jeziorski/TAIPEI
State-owned Aerospace Industrial Development Corporation (AIDC) of Taiwan is to offer small stakes to potential investors in a bid to kick-start its privatisation, which it still hopes to complete this year. The company wants to sell up to 40% of its stock to a foreign strategic investor, but possible partners have proved wary about investing in a diversified enterprise with a military slant in such a politically sensitive location.
AIDC president Chin Hu insists that suitors including AlliedSignal, Boeing, General Electric and Bombardier are interested in investing. He attributes the latter's recent reticence to his company's large military and non-airframe interests (Flight International, 11-17 August), but he claims this may change after AIDC's planned restructuring, in the course of which some businesses will be spun off.
Taiwanese law, technically at least, requires AIDC to be privatised this year. Hu says this could still happen, "if, for example, three different foreign strategic investors each buy 5%". He suggests employees would be offered a further 20-25% and local investors 15-20%, with Taipei keeping remaining stock for an unspecified term.
Hu says initial privatisation would probably be followed by the splitting of AIDC, with a civil airframer becoming a partner in a new airframe subsidiary and an engine specialist in an engine subsidiary. He says that the company would also aim to spin off its defence, maintenance and avionics capabilities. Following this restructuring, Hu says that he would expect foreign investors to inject more cash into their respective portions.
AIDC faces excess capacity when production of its indigenous fighter, the Ching-Kuo, ceases this year. Hu expects a two-year slump, but says prospects should improve after 2005.
Source: Flight International
