Parts distributor Aviall has secured new financing to underwrite a 10-year, $3 billion deal with Rolls-Royce to provide aftermarket parts support for the T56/501-D family of turboprop engines.
The exclusive contract, which starts on 2 January 2002, follows a similar 10-year agreement signed last year to provide worldwide parts support for the Rolls-Royce 250 turboshaft engine.
The new financing includes a $200 million secured credit facility led by Citigroup, $80 million from private debt investors, and the sale of $45 million in stock to the Carlyle Group. Equity investment firm Carlyle will take a stake of around 30% in the Dallas, Texas-based parts distributor.
Aviall will immediately draw on $90 million of its new financing to acquire inventory and pay licence fees related to the T56 contract. The agreement with Rolls-Royce is expected to generate sales exceeding $250 million in the first year. The 250- engine contract, which began in January 2000, generated $110 million in revenues last year, according to Aviall.
Other companies in the aerospace aftermarket business are faring less well. Kellstrom Industries, a leader in reselling and leasing aircraft and engine parts, has warned it may have to seek bankruptcy protection after missing interest payments on loans. The company's senior lenders are providing interim funding as efforts to arrange financing continue.
Kellstrom, which acquired Lockheed Martin C-130 aftermarket support specialist Certified Aircraft Parts in April 1999 and the aircraft and engine parts resale business of financially struggling Aviation Sales in December 2000, has recently been delisted by the US technology share exchange Nasdaq.
Source: Flight International
