Gulfstream Aerospace has announced a $775 million public offering that will reduce investment firm Forstmann Little's remaining stake in the Canadian business aircraft manufacturer to less than 25%.
Forstmann, its affiliates and Gulfstream management, hold 43.2% of the company, and will own 25.3% after the stock sale.
New York-based Forstmann, which purchased Gulfstream from Chrysler in 1990 for $860 million, sold around half of its stake in a 1996 initial public offering which raised $1.02 billion.
That stock offering netted Gulfstream only $114 million, a sum which was used to pay down debt, and some analysts have expressed concern that none of the proceeds from this latest sale will go to the company.
The secondary offering comes after Gulfstream reported record results for 1997, followed by a record first quarter. The company delivered 51 aircraft last year and expects to hand over 58 machines this year, with production of both the Gulfstream IV-SP and V scheduled to exceed 60 a year by next year.
The company's orderbook had slipped by the end of last year, however, as it worked through its GV backlog. Gulfstream sold only seven GVs in 1997, compared with 21 in 1996, plus 39 GIV-SPs. down from 44 the previous year.
This year has started off strongly, however, with the company signing contracts for a record 25 aircraft. Only 13 of these have been added to the firm order backlog, which stood at a total of 87 at the end of last year.
Analysts are concerned, meanwhile, that Gulfstream's expenditure on research and development has plummeted, from 5.5% of sales in 1996 to just 0.6% last year, with the completion of the $800 million GV development programme.
For the near-term future, the company says, investment will be in product improvements rather than in the development of new aircraft.
Source: Flight International
