Cessna buys Colombia! Is this a good thing for GA ?

[sternone]

http://www.avweb.com/newspics/columbia_cessna.jpg

It's Official: Cessna to Acquire Columbia

Avwebbiz:

Cessna-Columbia Deal Confirmed; Cirrus Says That's a Good Thing


Cirrus Design co-founder Dale Klapmeier told AVweb Monday that Cessna's planned acquisition of Columbia Aircraft "is going to help our industry." In an exclusive interview with AVweb, Klapmeier said the move by Cessna not only validates the effort of Cirrus and Columbia in modernizing general aviation aircraft, it adds significant clout to get that message to potential aircraft owners. "It opens up the market to more people," Klapmeier said. "It validates what we've been saying for a decade, now."


Cessna CEO Jack Pelton declined to confirm the rampant rumors of the deal in front of the world aviation media at the National Business Aviation Association convention in Atlanta earlier on Monday. "We try not to confirm or speculate on rumors that might be out in the press regarding [the] potential acquisitions," he said. Columbia issued news releases in the evening that confirmed the deal and also announced that the company was seeking bankruptcy protection under Chapter 11. "We have explored many options over the past months," said Columbia Chief Restructuring Officer Carl Young. "This path enables the Company to manage its present cash flow and liabilities while pursuing a plan that enables us to continue operating until a final sale can be completed."


The Columbia news release says the sale to Cessna is contingent on the bankruptcy court's approval and a final agreement with Cessna. According to the news release, Cessna has signed a letter of intent to buy certain assets and assume some of Columbia's debt. Carl Young said that the deal ensures that existing owners and position holders will be looked after. "The sale of Columbia Aircraft Manufacturing assets to Cessna offers the best avenue to maximize value for all of Columbia’s stakeholders and existing and future customers. Cessna is excited about the prospect of adding the Columbia products to its product line and will provide additional capabilities, world-class processes and financial strength to effectively serve existing Columbia customers and grow the business. Under the agreement reached with Cessna all product warranty and service issues will continue to be honored post-acquisition and customers should expect an enhanced customer experience once the deal closes," Young said.

[IO540]

Does anybody care? The Columbia 400 is great on paper but according to somebody I know who knows them rather well (professionally) they suffer from a constant stream of silly problems and the manufacturer doesn't have the resources to sort them out.

They also don't have a functional anti-ice solution, which is needed for the wing aerofoil section they use.

[sternone]

They also don't have a functional anti-ice solution, which is needed for the wing aerofoil section they use.

How could they ? With those legs picking up ice like hell!!

[IO540]

Ice on the undercarriage is not necessarily a problem

I would agree this is true when airborne, but the 400 has very tightly cowled wheels (to keep the drag down), and if you were to pick up say a couple of inches of ice I bet you the wheels would be firmly stuck, which would make a landing quite exciting :)

[QDMQDMQDM]

Does anybody care? The Columbia 400 is great on paper but according to somebody I know who knows them rather well (professionally) they suffer from a constant stream of silly problems and the manufacturer doesn't have the resources to sort them out.

Which would be one reason why an acquisition by Cessna would make sense, no?

[IO540]

Which would be one reason why an acquisition by Cessna would make sense, no?

Yes, unless they are doing it for the other standard reason for takeovers, which is to buy the competition and close it down.

[sternone]

Yes, unless they are doing it for the other standard reason for takeovers, which is to buy the competition and close it down.

I don't have a feeling that columbia models fits into the Cessna range of models... or they just add them to their model line or they use the columbia's for their Cessna NGP ?

Was Columbia any competition for Cessna ?

[sternone]

COLUMBIA AIRCRAFT RECEIVES DEBTOR-IN-POSESSION FINANCING

Bend, OR, Sept. 24, 2007 – Columbia Aircraft Manufacturing Corporation announced today
that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. This action has resulted from a series of events dating back to 2006 that hampered the
Company’s ability to deliver aircraft and disrupted cash flow. These events include an
unanticipated and damaging delay in the certification program for the G1000 avionics suite, a freak
hail storm that damaged 67 aircraft awaiting certification and finally the recent supply chain
disruption for essential avionics equipment.
Concurrently, Columbia announced that it has received a $3 million interim commitment for
Debtor-in-Possession financing from certain of its pre-petition lenders. The Company will be filing
a motion with the Bankruptcy Court seeking approval for this financing on an expedited basis.
Columbia Chief Restructuring Officer, Carl Young, emphasized that the bankruptcy filing was
required to enable the Company to continue its normal operations and said “It is very gratifying that
our pre-petition lenders are willing to support the Company during this difficult time. We believe
that, coupled to the other strategic decision announced today, this infusion of liquidity will allow
Columbia to manage its present cash flow and liabilities while pursuing a plan that enables us to
continue operating normally and maximize value for stakeholders, employees and existing and
future customers.”
Concurrently Columbia filed a motion with the Bankruptcy Court seeking approval for a sale of
substantially all of its assets to Cessna Aircraft Company, the world's largest manufacturer of
general aviation airplanes as measured by unit sales. As part of that motion, Columbia is also
asking the Bankruptcy Court to establish bidding procedures that will enable other interested
bidders to submit offers and bid at an auction currently scheduled to be held in November.

[Fuji Abound]

Wasnt the whole problem started by Garmin?

[High Wing Drifter]

I don't have a feeling that columbia models fits into the Cessna range of models
Think of VW and Rolls Royce! Two totally different markets, values and brands. One owner.

[mike172]

VW own Bentley, BMW own Rolls. But we got your point!

[High Wing Drifter]

Funny that. I wrote Bentley first, thought "naaah". The moral of the story is always Google before posting :O

Quick edit to day:Just Googled, VW did buy Rolls, but sold the name to BMW. Now back to the topic!

[sternone]

Ola, Cirrus seems to be really pissed off that Cessna also will offer ballistic parachutes in their planes ? Hihi...


Cirrus Bids For Columbia: Sale/Bankruptcy Now 'Likely To Be Long-Term Event'

Aeronews:

Cirrus Design Now Confirmed To Be In The Bidding
Over the last few weeks since ANN first broke the story of the impending Columbia Shake-Up/Bankruptcy and Cessna's interest in purchasing most of the assets of the foundering high-performance A/C manufacturer, what was once touted as a "fairly simple" bankruptcy sale is now taking on overtones of a soap opera.
A number of bidders are coming to the fore in an effort to fight off the takeover of the principal Columbia assets by Cessna/Textron. As a result of that, a number of legal papers (by four parties, to date) have been filed rejecting the deal that Cessna signed with Columbia officials as "overly favorable" to Cessna.
Just as interesting, ANN has confirmed that industry leading high-performance composite aircraft builder (and aggressive Columbia competitor), Cirrus Design, is now actively involved in the bidding process. Little is known about the intent of the company at this point, but one can safely assume that the Cirrus Design's principal interest is in seeing Columbia (the company that could be credited as one of CD's main competitors) kept from falling into the hands of Cessna... an undeniably massive and very competitively oriented company that would get a HUGE step-up in finally leveraging a truly competitive airframe (next-gen, high-performance, composite, etc) against the Duluth (MN) company.
ANN is in the process of consulting with CD officials to get a statement and background info as to their intent for any potential offer for Columbia's assets.
A number of other parties, as noted above, are protesting the alleged "sweetheart deal" that they claim Cessna has set up for themselves via prior negotiations with Columbia officials. In a recent filing obtained by ANN, one of those protestors, Versa Capital Management, Inc., claimed that "Based on the procedures proposed in the Bid Motion and the LOI, the bidding process is fundamentally unfair, hinders or chills competitive bidding activity, and inappropriately favors Cessna to the detriment of the estate and other bidders."
An 11 point, 15 page pleading asserts that:
Letter of Intent is Illusory and Cessna is Under no Contractual Obligation to Purchase the Debtor’s Assets.
Cessna is not Entitled to Stalking Horse Status or a “Break Up” Fee.
Cessna’s Purchase Price Cannot be Determined Prior to the Date Competing Bids are Due.
Cessna Must Disclose Adjustments it Made to the Debtor’s August 2007 Balance Sheet and its Effect on the Actual Cash Component to be Paid on the Closing Date.
Cessna is not a “Qualified Bidder” and has not Submitted a “Qualified Bid.”
The Break Up Fee is Unreasonably Large and the Overbid Minimum Chills Bidding.
The Bid Motion Seeks Approval of a Bidding Process That the Debtor can Change.
Debtor’s Discretion is Arbitrary.
The Auction Process Does not Provide for Court Supervision or Notice of Changes in Cessna’s Offer.
Key Employee Agreements Must be Disclosed.
The LOI Impermissibly Includes a Request for Extraordinary Relief.
The pleading concludes that "The Debtor represents that it wants a fair bidding process designed to maximize benefit to the estate, yet the LOI and the Bid Motion appear designed to discourage competitive bidding. All bidders are entitled to have a fair opportunity to bid on the Debtor’s assets. The Bid Motion impermissibly favors Cessna to the detriment of other bidders. The playing field is not level; it is tilted in favor of Cessna. For the reasons set forth above, the Court should deny the Bid Motion."
In other pleadings filed late last week, 'The Official Unsecured Creditors Committee of Columbia Aircraft Manufacturing Corporation' filed a 'Response to Debtor's Motion for Approval of Bidding Procedures, Overbid Protection and Break-Up Fee and Form and Manner and Notice of Bidding Procedure.'

The Committee asserted that it "has no objection to the sale of substantially all of Debtor's assets, but has objections to certain particulars of the bidding procedures and the break-up fee. The Committee's response... will set forth alternate terms which it would find acceptable to replace those terms which it believes would hinder bidding and depress the ultimate sale price of Debtor's assets, and request certain information which the Committee believes will aid in promotion of bidding. The Courts have recognized that the sale of substantially all of the Debtor's assets is essentially a reorganization without the protections given to creditors under the Code with regards to a reorganization plan.
Thus, in a sale of substantially all of the assets of a Chapter 11 debtor the courts have recognized that creditors should be provided the same rights and receive the same protections they would if the proposals were in a reorganization plan. In re Continental Air Lines, Inc., 780 F.2d 1223, 1228 (5th Cis. 1986). The Committee is seeking the same protections here to ensure that unsecured creditors will recover as much as possible."

Also heavily involved in the various legal actions that are flying about, are the Columbia owners themselves (via the Columbia Aircraft Owners Association, known as Club Columbia). The group, when you figure in unpaid warranty claims as well as other items like undelivered options and equipment (Evade, A/C, etc...), turnjs out to be one of the biggest creditors in the mix. On the face it of it, the owner's 'hit' seems no competition for Garmin... who is holding the bag for well over $20 million dollars in secured and unsecured claims (makes the $$tens$$ of thousands that ANN got nailed for seem tame by comparison... still -- OUCH).
Depending on how you look at it, though, the Columbia owners may ultimately be the biggest creditors of the bunch.
According to docs filed on behalf of Columbia owners, "Collectively, the aircraft owners have arguably the largest economic stake at risk in Columbia Aircraft Manufacturing Corporation’s (the “Debtor”) bankruptcy proceeding. The 600-plus Columbia aircraft purchased by these owners since 2003 have an aggregate value of over $250,000,000. Any interruption to the production of the Columbia aircraft, the sale of replacement aircraft parts, and the rendering of after-market technical support would cause the resale value of existing Columbia aircraft to plummet by 20-40%, corresponding to a loss of $50,000,000-$100,000,000 in asset value. Consequently, the aircraft owners face potential losses in the outcome of this bankruptcy that dwarf the claims of any single creditor."

In the meantime, a major meeting in this process takes place this Monday... originally targeted to be the date for the Court's approval of a potential 'Purchase Agreement and Terms of the Bid/Auction Process' (which seems unlikely now, due to the added actions noted above). Also, November 15th was originally scheduled to be the Bid Deadline and November 30th was expected to be the date for a possible closing of the sale. If you'll excuse the pun... that all seems to be "up in the air" for the foreseeable future.