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Thu, Apr 24, 2008

Frank Thielert Ousted From Company He Founded

Company Files For Insolvency; Future Unclear

Aero-News has received word two members of the board at Thielert Aircraft Engines AG were dismissed over discrepancies with the company's annual financial statements for the years 2003 through 2005. One of those people is company founder and former CEO Frank Thielert (shown below); the other, former Chief Financial Officer Roswitha Grosser.

The company also filed for insolvency, due to what it termed "immediate illiquidity."

Though demand for its powerplants has increased steadily in the past two years -- with aircraft makers such as Diamond and Cessna offering factory-spec new aircraft equipped with Thielert diesels -- the company has a decidedly rocky financial history. Thielert has delayed releasing its 2007 earnings report until the end of April, citing the need to reexamine results from previous years. That decision came after a German court tossed out Thielert earnings statements from 2003 through 2005, due to valuation discrepancies.

As ANN reported earlier this month, shares in Thielert fell to their lowest levels in three years after news of trouble at the diesel-engine maker first surfaced. At that time, the company's board requested the immediate removal of Thielert and Grosser from their executive-level positions, but added Thielert would continue serving as Chief Operating Officer once a successor was appointed.

However, things appear to have continued to decline in the weeks following that announcement. According to documents obtained by ANN, on Wednesday Thielert's supervisory board dismissed Thielert and Grosser outright, and terminated their contracts with the company.

The board cited information since received from the Hamburg Office of Criminal Investigation, in connection with preliminary investigations against management board members of the company, as cause for their dismissals. Based on those findings, the suspect financial statements from 2003-2005 are to be considered "probably incorrect and possibly void," according to company documents.

"The suit against Thielert is still active," said a spokesman with the Hamburg Attorney General's office. "The charges are fraud."

Revelations of errors to those reports -- willful or not -- have ominous implications for the company's restructuring efforts, and perhaps its future. According to company records, investors have since shied away from supporting the restructuring plan... and without their support, that plan is on hold.

What that means for planemakers offering Thielert diesels on their aircraft... customers already flying behind Thielert's engines... and respected American parts supplier Superior Air Parts, which was bought out by Thielert in March 2006... remains to be seen.

FMI: www.thielert.com

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