Regional jet maker Fairchild Aerospace is to be bought by an alliance led by US investment firm Clayton, Dubilier & Rice (CD&R) and German insurance company Allianz. The $1.2 billion deal, plans for which were revealed by Flight International in October, will provide funding for Fairchild's 728JET family.

The transaction, which requires US and European Union (EU) approval, will see CD&R and Allianz inject capital of $400 million into Fairchild. Four German banks will also provide loans of $350 million, underwritten by federal and Bavarian state guarantees. EU approval was needed for the loans, which delayed the deal. Another $440 million of financing will come in the form of credit lines.

Under the agreement, the alliance will take 90% control of Fairchild, which will move its base to Munich from San Antonio in the USA. Current majority shareholder Carl Albert will be replaced as chairman and chief executive by CD&R principal Charles Pieper, formerly of General Electric, with Fairchild president Jim Robinson also leaving.

The refinancing could not have come soon enough for the US-German company. Although its operations, including 328JET production and Airbus subcontract work, are in profit, development of the 70-seat 728JET has strained its financial resources.

Source: Flight International