MD Helicopters has new owner

[hotzenplotz]

MD Helicopters has new owner

MD Helicopters recently completed a significant restructuring transaction. As part of the transaction, Patriarch Partners, LLC, a New York based financial firm with approximately $4.5 billion under management, acquired a controlling interest in MD Helicopters, Inc. The restructuring ensures that MDHI will have adequate working capital to continue production of existing product lines, aggressively improve customer support and fulfill existing orders. Following the recapitalization, MDHI is an independent Arizona-based company. As part of the recapitalization, RDM, a Netherlands-based group, has retained a minority interest through one of its operating companies. RDM purchased the light helicopter operations from The Boeing Company in 1999. "I am very pleased with this transaction as it is fully in line with our efforts over the past years to support the company and its products," said Joep van den Nieuwenhuijzen, RDM's owner. "This recapitalization assures our customers that MD Helicopters will have sufficient working capital to be a strong, viable company fully able to support its products and its customers in their operations," said Henk Schaeken, CEO of MD Helicopters. "We are proud to add MDHI to our company portfolio. We believe that the demand for MD Helicopters' products is deep and strong. We are pleased to be part of this great product line's future. The strength of Patriarch Partners and the depth of our asset base provides the long-term financial and strategic support that the Company needs to rise to its natural level in the light helicopter market," said Lynn Tilton, the Chief Executive Officer of Patriarch Partners.
Schaeken said MD Helicopters' immediate goal is to restore customer confidence in the Company and in its ability to support its products. "We will be meeting with our customers and suppliers as soon as possible to restore their confidences in our long-term viability and the solid working relationships we once enjoyed," Schaeken said. MD Helicopters has ignited its supply chain and production line. The company has a backlog of 17 helicopters, including recent orders by the police departments of Houston, Glendale and Columbus and two private owners. MD Helicopters also intends to bid its MD Explorer for the US Army's Light Utility Helicopter program.

[Ned-Air2Air]

Doubt that they will follow through with that once they do due dilligence and also now that they have lost the light attack helo comp to Bell.

Personally I would say that is the straw that broke the camels back and MD are on their way out. Its a shame as they have a great product but why the heck would you sink money into a black hole.

[rotorboy]

Sometimes you just need a good tax write-off:ok:

[Eurobolkow]

There's a big difference between being worth $4.5 billion and having that amount 'under management'.

17 Helicopters on back order, thats not a very healthy position, I'll bet EC and AW have 20 times that on back order at any given moment.

The fundamental problem is one of economics of scale, its very expensive to support a small worldwide fleet and unless the new owners are prepared to invest out of all proportion to that which could be rationally justified then I fear that the current situation will continue.

[diethelm]

Sustaining all the costs of manufacturing on 20 civilian ships a year is most likely not economical. Boeing owns the rights to the 530 for non-civilian use so MD will have a tough time competing with them for any non-civilian sales such as special forces and foreign governments.

However, with 3,000 ships still operating worldwide (when the operators can get parts) it is likely that there is a sustainable business in parts and component repair. It will be interesting to see what type of structure is used to resolve the issues with the existing vendors. I would have used a bankruptcy.

[helicoptaaargh]

Tut Tut Tut you guys
Why does this industry attract so many knockers and gloom forseers (is that a real word).
Good luck to them, I admire their courage and applaude their investment, wether or not it works at least it helps get all the MD operators back in buisness

[Auscan]

I would like to hear from any 500 owners/operators to see if they are struggling to get support from MD. It must be tough to operate a multi MD fleet when you dont know what tommorrow will bring for the manufacturer.

[Dave_Jackson]

helicoptaaargh,Why does this industry attract so many knockers and gloom forseers.
Because 'conventional' rotorcraft have come to the end of a sixty year long trek down a dead-end road.

The upcoming X2 class of coaxials (http://www.unicopter.com/1465.html), and perhaps the tiltrotor, are the start of rotorcraft's belated 2nd generation.

http://www.UniCopter.com/No_Tail_Rotor.gif

[PANews]

QUOTE: However, with 3,000 ships still operating worldwide (when the operators can get parts) it is likely that there is a sustainable business in parts and component repair.

Therin seems to lie a problem for MDHI.

IT APPEARS that one of the solution pushed forward to aleviate earlier problems was to outsource. As a result the number of items still manufactured in house is [or may be] reduced to virtually nothing. The main structures of the 500 line are produced by Kaman and the 900 is produced in Turkey. Engines and avionics are outsourced, most if not all gearboxes, MRBs ... all the potential high value stuff in effect.

One result of such actions is/may be that Mesa is reduced to being a middle man in the spares line. Not dispensible because they are the design authority/manufacturer, but potentially just an addition to the cost strata.

I have no doubt that someone will come leaping in to say this is complete rubbish and that MD process millions of such and such widgets in house.... but even then in the end they are relatively obscure parts.

The fact remains, on the face of it, little or nothing substantive is now produced in house and that may well affect overall profitability leading to the saving of the company.

That may well be negative but it must have a bearing on the future struggle that the bean counters must have considered before investing.

If they remain happy knowing the problems then MD is set to return.

[Cross-eyed]

QUOTE: "I have no doubt that someone will come leaping in to say this is complete rubbish and that MD process millions of such and such widgets in house.... but even then in the end they are relatively obscure parts.

The fact remains, on the face of it, little or nothing substantive is now produced in house and that may well affect overall profitability leading to the saving of the company."

And what makes outsourcing manufacturing inherently unprofitable?

[PANews]

And what makes outsourcing manufacturing inherently unprofitable?

Nothing.

[hotzenplotz]

How is the chance for the MD-900 to win the Army LUH contract?

Bells 210 at 3 Mio $ a unit and a DOC of under 600$/h is a tough concurrent.

Is the MD-900 really competition for Bell?

[Ned-Air2Air]

If anyone things the Explorer would win that competition they are dreaming. Why would the military want to buy something from MD when they cant even support the few civil operators out there with the product.

MD needs a hell of a lot more money than the $50 mil Patriach wants to tip into it to get back on an even keel.