Columbia Aircraft's favoured buyer Cessna has completed due diligence of the Bend, Oregon-based general aviation aircraft manufacturer, but at least five other potential buyers of the company, including Cirrus Design, have begun to prepare their bids ahead of the 27 November auction.
Three days before Columbia went bankrupt on 24 September it signed a letter of intent to sell to Cessna, and a month later shareholders signed a consistent asset purchase agreement. Cessna, and any other winning bidder, is committed to spending at least $24.5 million at the auction. Payments of $14 million in cash and $8.5 million toward debt are assured, as are Columbia's current warranties. "I think everybody knows that the business is going to survive," says Columbia.
Cessna and Cirrus have pledged to keep the manufacturer of four-seat composite piston aircraft in Bend. Alan Klapmeier, chief executive of Duluth, Minnesota-based Cirrus, says that although he has not yet decided to enter the bidding race "we think we can make Columbia's aircraft more profitable and integrate it with our existing overhead costs".
The Cirrus team is checking for hidden expenses with the same due-diligence inspections under a non-disclosure agreement, as are agents of Versa Capital Management, Park Electrochemical and New York investor Granger Whitelaw. There may be others at the auction, Columbia says. "Some of them are doing some work behind the scenes."
The identity of the bidders will be made known on 20 November when they have to declare their interest by placing a $1 million deposit.
Columbia is being kept afloat by a $3 million loan issued by pre-petition lenders. Executives laid off 300 workers in August and promptly called 181 back. Today about 360 workers produce three aircraft a week. Although deliveries dipped in the third quarter, overall numbers are up on last year's tally, when Columbia reported $90 million in gross revenue.
Columbia owes $60 million to its creditors - which include Garmin, Teledyne Continental, Hartzell Propeller and the government of Malaysia. Bankruptcy has been a respite, says the company. "It provides a fresh start and a little bit of breathing room from your creditors."
Court documents specify a number of claims the new owner will pay, such as $2 million to Garmin, $4.3 million to install anti-ice systems already sold to customers and $4.2 million to cover warranty claims.
Many owners have fear they could lose out on the $10 million worth of products that they have paid for but not yet received and are demanding that the bankruptcy court address these concerns.
Source: Flight International
