Kaman press release:
Kaman Corp. (Nasdaq: KAMN) reported today that its subsidiary, Kaman Aerospace International Corporation (Kaman), has reached an agreement with the Commonwealth of Australia that establishes mutually agreed terms for conclusion of the SH-2G(A) Super Seasprite program.
Under the terms of the Agreement, ownership of the 11 SH-2G(A) Super Seasprite helicopters will be transferred to Kaman along with spare parts and associated equipment. The transfer is subject to US government approval and the Commonwealth will carry out that process, which could take several months. Thereafter, Kaman will seek to sell the aircraft to another customer or customers and will share the proceeds of each sale with the Commonwealth under a pre-established formula. Kaman has agreed that at least $37 million (US) of such payments will be made to the Commonwealth regardless of sales, with at least $25 million (US) to be paid by March 2011, and $6 million (US) each in years 2012 and 2013. Under the agreement, Kaman will forego payment on approximately $35 million (US) in net unbilled receivables in exchange for the helicopters, spare parts and equipment, which will be recorded as inventory. The value of this inventory is expected to exceed the amount of the net unbilled receivables and the guaranteed payments.
In commenting on the agreement, Neal J. Keating, chairman, president and chief executive officer of Kaman Corporation, said, "We appreciate the Australian government's willingness to work with us to develop a mutually satisfactory path to conclude their Super Seasprite program. We are also pleased to have the opportunity to sell these highly capable aircraft to another customer."
The Kaman Super Seasprite is currently serving with the governments of Egypt, New Zealand and Poland. The aircraft also served with distinction as a front-line U.S. Navy helicopter, where its reliability and durability were well respected.
Kaman Corp. conducts business in the aerospace and industrial distribution markets.
Australian Government statement:
On 5 March 2008 the Government announced its intention to cancel the Seasprite helicopter project.
A satisfactory conclusion to the Seasprite project has now been agreed with the contractor, Kaman, to cancel the project on mutually agreed terms. An agreement has today been signed between the Australian Government and the contractor setting out the agreed terms. The agreement has some confidential aspects, however I can say that, subject to US Government approval, the project deliverables including the aircraft, training equipment and spare parts would be returned to Kaman for sale on the open market. The Australian Government and Kaman would share in the profits of subsequent sales.
Under the agreement, the Australian Government will receive at least 50 per cent of the proceeds from any sale of the helicopters by Kaman with a guaranteed financial return from Kaman of $39.5 million. In addition a further $30 million worth of spares will be retained for use on the Seahawk and Black Hawk helicopter fleets.
Further, the Australian Government has saved $150 million that would otherwise have been spent on the Seasprite project that will now be available for use on other capability.
Minister for Defence Joel Fitzgibbon said that he was pleased that the early resolution that had been achieved by the Australian negotiating team removes the uncertainty surrounding the Seasprite project.
This is considered the best outcome for the Government as well as the personnel affected by the decision. The Government is assisting Kaman with the transition of their personnel in a sector that is short of qualified and experienced people.
Mr Fitzgibbon said, “The Government has taken the tough decision and acted decisively to achieve the necessary outcome without a protracted legal dispute, to ensure the nation’s security.
“A legal and financial framework to facilitate the agreement is in place that provides a reasonable return for the Australian taxpayer. We are determined to ensure that the Defence Force receives the capability it needs. We have learned some valuable lessons from this project that we can apply to better ensure the success of future projects, and make sure that taxpayers receive value for their money,” Mr Fitzgibbon said.