Pemco Aviation Group chairman Michael Tennenbaum has offered to purchase all of the outstanding capital stock of Pemco World Air Services (PWAS), the wholly-owned commercial services unit of the US aircraft maintenance and modification firm.
“In order to assure that Pemco Aviation Group is not forced into accepting a less than appropriate bid to acquire PWAS due to financing needs, I hereby agree, at your option, to purchase all of the outstanding capital stock of PWAS for $30 million in cash, or to provide or cause to be provided to Pemco financing on commercially reasonable terms in an amount sufficient to refinance all of Pemco’s then current debt such that no principal payments would be due until April 30 2008,” says Tennenbaum in a letter of offer to the company.
The offer will remain open until the earlier of April 30 2008 or the sale of PWAS to a third party.
Dothan, Alabama-based PWAS performs heavy maintenance and major modifications on narrowbody and widebody aircraft. Additionally the company converts aircraft from passenger to freighter configuration.
Pemco in January announced plans to float the commercial services business in an initial public offering (IPO) on the London Stock Exchange’s alternative investment market, or AIM. It engaged investment bankers to assist with the offering but also began exploring the possibility of selling the business.
Speaking to Flightglobal, Pemco senior VP and CFO Randall Shealy reveals: “We may still take [PWAS] public, but this [IPO announcement] generated interest from several parties, and we’re evaluating all of our options.”
This includes Tennenbaum’s offer to acquire PWAS, he confirms.
Shealy notes that Pemco’s business is “about 50% commercial and about 50% government”. If PWAS is sold, it will effectively split the company in half.
Pemco president and CEO Ronald Aramini in a statement says consummation of these strategic transactions “should enable to the company to meet its goal of eliminating its debt and providing the necessary working capital to support the government services business”
Separately, Pemco today reported a 2006 net income of $0.5 million compared to a net loss of $5.8 million in 2005, a period when operations were negatively affected by Northwest Airlines’ bankruptcy and a two-month lockout of union employees at the Dothan facility, among other factors. Revenue for the year grew 19.2% to $160.7 million.
“We are very pleased to return to profitable operations and report net income for 2006. In addition, we are progressing with several strategic initiatives to increase shareholder value,” says Aramini.
He notes that in the fourth quarter Pemco sold its Pemco Engineers subsidiary, and now “several companies” have approached the firm with an interest in purchasing its Space Vector subsidiary in California.
“One of those parties has signed a letter of intent, and we expect to sell Space Vector in the second quarter of 2007,” says Aramini
Source: FlightGlobal.com
