Paul Lewis/WASHINGTON DC Julian Moxon/PARIS
New York investment house Clayton, Dubilier & Rice is close to acquiring a controlling stake in Fairchild Aerospace, which has been seeking a cash injection to underwrite continued development of the 728JET series and 428JET regional aircraft.
Clayton, Dubilier & Rice will not confirm or deny its interest in the US-German aerospace manufacturer. "We do not want to comment until there is something to announce," says the company. Sources close to the negotiations, however, say that while no agreement has been signed, the investment house could seal the deal by the middle of the month.
Fairchild says it is "in talks with four different parties about an equity stake" and admits it is closer to agreement with one of the bidders than the others. "This situation could change," it warns. It declines to comment on whether Clayton, Dubilier & Rice is involved in the talks.
Speaking at the European Regions Airline Association general assembly in Paris in late September, president and chief executive Jim Robinson said he expected to be able to say more about the equity purchase "within 30 days".
It is thought that the investment house will acquire the bulk of the 56% of Fairchild held by chairman Carl Albert (below).
Privately owned Fairchild acknowledges it is in discussions with potential investors in the wake of an aborted $300 million bond offer following a weakening in financial markets (Flight International, 29 September-5 October).
Clayton, Dubilier & Rice specialises in leveraged buy-outs, but does not manage companies. It retains investments on average for around five years before they are either publicly listed or sold. The company acquired Allison in 1993, as part of a leverage-managed purchase, before selling the US engine maker to Rolls-Royce in 1997.
Albert had been planning an eventual public listing. The combination of a weak bond market and a rapid expansion has left Fairchild short of the estimated $1.35 billion required to develop the new 70-seat 728JET and 44-seat 428JET derivative of the 328JET. German federal and state guaranteed loans, worth $350 million, are also riding on a fresh injection of capital.
Source: Flight International
