Paul Lewis/WASHINGTON DC
Fairchild Aerospace's owners have embarked on an urgent search for new equity investors to underwrite continued development of the 728JET series and 428JET regional aircraft programmes after having to abandon a planned bond offer.
Chairman Carl Albert is believed to be negotiating with banks and financiers seeking to off-load a portion of his 56% stake in privately held Fairchild. "We're in discussions with several potential investors," the company confirms.
Fairchild estimates that it needs $1.2 billion to develop the 528/728/928JET family and an additional $150 million for the 428JET derivative of the 328JET. Budgeted expenditure for this year through to the end of September is $164 million. The company claims 728JET partners have promised another $270 million, while Israel Aircraft Industries has signed an $80 million deal to support 428JET development.
Albert had planned to raise another $300 million from a bond issue, but this has been scrapped in the face of a weak market, leaving the firm urgently seeking investors. About $350 million in German federal and state guaranteed loans from a consortium of banks is believed to be contingent on a fresh injection of private capital.
Fairchild reportedly bridged the gap with an $80 million short-term bank loan after running short of cash in July, when the company was near to liquidation says German magazine Manager. The firm has criticised the report for inaccuracy. "We're in a lot better shape now. We're now pretty much current with our suppliers," says a source.
Cashflow has also been hit by delays to the introduction of the new 328JET at a time when design work on the new regional family has gathered pace. Deliveries of the 32-seater are under way to add to a trickle of 328 turboprops.
Speculation has surrounded Fairchild since it launched the 70-seat regional jet last year. It was at one time negotiating a tie-up with ATR partners Aerospatiale and Alenia and, more recently, its chief competitor Bombardier was rumoured to be conducting due diligence. At stake are aircraft orders and options in hand with a book value of around $9 billion.
Source: Flight International
