The new owner of MD Helicopters (MDHI) has signed a long-term supplier agreement with Kaman Aerospace after making a lump sum payment to the company to resolve past debts. The deal, announced on 16 November, removes a key obstacle for the Mesa, Arizona-based helicopter manufacturer to resume normal production operations with a US Army decision on a potential $1.1 billion contract for light utility helicopters still pending.
Lynne Tilton, founder of the Patriarch Partners investment capital firm that purchased MDHI in August, says the Kaman deal is among 50 critical supplier issues she inherited when the company was purchased. Three issues are still pending, she says.
Kaman, which took a $21 million write-off in the third quarter due to unpaid MDHI bills, provides fuselages for MD 500 and MD 600 series helicopters and composite rotor blades for the MD Explorer. The Explorer is MDHI’s contender in the army’s Light Utility Helicopter (LUH) competition.
The deal “was a little more heavily front-loaded than I may have liked, but we needed to hold hands and sing Kum-bah-yah for a long time”, says Tilton.
Terms of Kaman’s pay-off were not disclosed. Tilton says the MDHI payment accounts for most of the money Kaman had already expended on MDHI products, while the company’s third-quarter write-off also included projected expeditures that were not covered in MDHI’s payment. Since acquiring MDHI in August, Patriarch has poured $150 million into completing the acquisition, paying off past debts, building a new logistics system and preparing the LUH bid for the army.
In October, MDHI and Lockheed Martin mutually agreed to break off a partnership on the LUH contract. Tilton says Lockheed’s role as a prime would have prevented the team from being competitive on cost.
STEPHEN TRIMBLE/WASHINGTON DC
Source: Flight International