Cirrus Design has struck a "shares for sales" deal with Ballistic Recovery Systems (BRS), which supplies the parachute for its new SR20 light aircraft.
Under the agreement, Cirrus will receive warrants to acquire up to 19.3% of BRS stock if it takes delivery of 1,150 emergency parachute systems over the next five years. The deal represents $12 million in sales for BRS and means that Cirrus would pay just over $1.6 million for its stake in the company, which is below market value.
To exercise the warrants, the aircraft manufacturer must meet agreed purchase levels of 250 parachutes in year three of the agreement, 400 in year four and 500 in year five. Cirrus began deliveries of the SR20 in July and is planning derivatives for which BRS would supply emergency parachutes.
As part of the deal, Cirrus will cancel $604,000 in purchase discounts due from BRS in exchange for its contribution in developing the system, which allows the complete aircraft to be recovered by parachute in the event of an engine failure. The SR20 is the first production aircraft to be certificated with the equipment.
Source: Flight International
