Former Columbia Sales VP, Rich Belzer, Reports To ANN
Another hearing was
held, Monday in Oregon, in the continuing legal drama surrounding
the future of bankrupt Columbia Aircraft. Former Sales Veep, Rich
Belzer, was in attendance and filed this report for ANN:
Is it the presence of Cessna that has brought bidders for
Columbia Aircraft's assets out of the woodwork? Or... were
potential bidders mislead about the value of the company this
summer and are now back because the price has fallen off a
cliff?
The highlight of (Monday's) Columbia Aircraft bankruptcy
hearing was the testimony of Philip M. Comerford, Jr., Managing
Director of ING Capital, the firm responsible for locating a
suitable buyer for the troubled aircraft manufacturer and closing a
deal.
In direct testimony, Comerford laid out the process used to
contact and provide information to 16 prospective buyers, 5 of whom
actually visited the company's factory in Bend OR. No offers
for the company were received, leaving Cessna's offer to acquire
the company's assets and selected liabilities out of a bankruptcy
which was filed in late September as the lone opportunity.
At issue is the Break-Up Fee of $500,000 which, in the motion
filed by Columbia Aircraft, would be due to Cessna should they lose
the auction to a higher bidder. The company's attorneys
contended that Cessna's actual expenses should be rounded up to
$0.5 million by virtue of the bidders their presence has
attracted.
But under
cross-examination by the attorney for Park Electrochemical, it
became clear that Park felt that Comerford had provided an
approximate valuation of between $80 and $100 million, thereby
discouraging Park from proceeding further with their due
diligence. Comerford claimed that he had never mentioned a
valuation amount to anyone and that Park must have reached the
conclusion that the company was worth that much by reviewing its
balance sheet.
In later testimony, however, Comerford admitted that Columbia
Aircraft's balance sheets showed no shareholder value and did not
include the company's most significant assets, its FAA Type
Certificates.
Whether frightened off by big numbers provided by ING Capital or
somehow concluding that the valuation would be high based upon a
review of Columbia Aircraft's meager balance sheets, it is clear
that Park Electrochemical is serious now. Their plan is to send 21
people in to Columbia Aircraft next week to complete their due
diligence.
In other developments:
- The auction has been delayed by six days and will be held on
November 27. Due to concern by potential bidders as to whether
Columbia Aircraft can be trusted to qualify potential bidders, the
judge will participate at 8:00 am so that any possible disqualified
bidders can obtain a ruling before the auction proceeds.
- Potential bidders represented by counsel were: Cessna,
Granger Whitelaw, Versa Capital Management, Park Electrochemical
and Cirrus/Arcapita.
- A settlement has been reached with Lance Neibauer on two of his
lawsuits against Columbia Aircraft. Payment of the settlement
amounts (not mentioned) will be made out of the proceeds of the
asset sale.
- ING Capital never contacted Cirrus as a potential buyer for
Columbia Aircraft although they did contact Cessna and
Piper. The rationale was that Cirrus was a direct competitor
(Cessna and Piper are not?) and the company did not want to provide
them with confidential information. Did anyone consider that
information on Columbia Aircraft's composite manufacturing
processes might be of considerably more value to companies that
have never certified a composite aircraft (Cessna and Piper) than
it would be to Cirrus -- which obviously has?
The judge seems determined to provide a level playing field for
all bidders. The due diligence is in the works; the excitement
begins again after Thanksgiving.
ANN thanks Rich for the inside scoop on a matter that will keep
the GA world guessing for many weeks (and months?) to
come. ANN, of course, will keep you updated...