Tampa, Florida-based MRO provider and conversions company Pemco World Air Services will be bankrolled by Avion Services Holdings through its Chapter 11 restructuring, the company has confirmed.
Pemco filed for Chapter 11 protection yesterday citing the overall economic downturn and a slowdown in the rate of aircraft overhauls for its financial problems. It will continue to trade as normal through the restructuring process, it said, which it anticipates lasting 90 days.
To that end, Avion Services, an affiliate company of Sun Capital and existing lender to the business, is to provide working capital through debtor-in-possession financing to allow Pemco to meet its ongoing obligations, including payments to staff and suppliers.
Further, Pemco has signed a purchase agreement with Avion, which will see the lender take charge of the firm unless other interested parties emerge.
"Pemco's operations have been impacted in recent years by a number of conditions, including a slowdown in the number and magnitude of MROs, a decrease in airplane conversions in Dothan, and the overall impact of the economic downturn," says Pemco chief executive William Meehan.
"While we have taken steps to address the challenges, we believe this process is the most effective and efficient way to restructure our business. We are pleased with the support we have received from Avion Services and look forward to expeditiously moving through the restructuring process and quickly emerging with a revised capital structure that will allow us to remain the industry leader."
As part of the restructuring it is reviewing the viability of its Dothan, Alabama facility where it undertakes military MRO and commercial modifications. If it decides against retaining the operation it anticipates a "prompt closure" of the site.
Pemco has further operations in Tampa, Cincinnati and Northern Kentucky and partner operations in Asia.