CLAYTON,
DUBILIER & RICE AND ALLIANZ CAPITAL PARTNERS JOIN IN (US)$1.2 BILLION
TRANSACTION FOR FAIRCHILD/DORNIER
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January 3,2000, OBERPFAFFENHOFEN, Germany, Investors will provide financing and operating management to develop company's new generation of jet products. An investment fund managed by Clayton, Dubilier & Rice, Inc. ("CD&R"), a leading private equity investor, and Allianz Capital Partners ("ACP"), an affiliate of Allianz Group, have formed an alliance to acquire Fairchild Aerospace Corp. ("Fairchild/Dornier"), a leading designer and manufacturer of regional and corporate jets and airliners. Fairchild is the parent company of Dornier Luftfahrt GmbH. The transaction is valued at approximately (US)$1.2 billion and includes an injection of $400 million in growth capital from CD&R and ACP and debt financing of nearly $800 million from a consortium of German commercial banks and other institutions. The proceeds will be used by Fairchild/Dornier for the development and production of its newest generation of aircraft products. |
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All approvals for CD&R and ACP investments have been obtained. The participation of the various banks is subject to the approval of their respective supervisory boards. The transaction is also subject to review by regulatory authorities in the European Union and the United States. Upon regulatory approval, the transaction is expected to close early in the first quarter of 2000.
"This investment of growth capital demonstrates the constructive role private equity can play in the world economy to support promising corporate expansion programs," said Joseph L. Rice, III, Chairman of CD&R. "With our commitment to provide ongoing management and strategic resources, coupled with the strong support of our co-investor, Allianz Capital Partners, Fairchild/Dornier will be well positioned to execute its long-term growth strategy."
"Allianz has taken a financial participation through ACP in Fairchild/Dornier because we believe that its product range will bring state-of-the-art technology and passenger comfort standards so far only associated with long-haul travelling to the fast growing regional jet market. We are delighted to enter into this investment together with CD&R, one of most renowned private equity investors," added Diethart Breipohl, a member of the board of management of Allianz AG.
Upon completion of the transaction, Charles P. Pieper, a principal of CD&R, will become Chairman and Chief Executive Officer of Fairchild/Dornier, succeeding Carl Albert, who will remain on the company's board. Prior to joining CD&R, Mr. Pieper was a senior operating executive at The General Electric Company for 16 years. His last position at the company was President and Chief Executive Officer of GE Lighting Europe.
"Fairchild/Dornier is a very sound company with a skilled and dedicated group of employees and a solid business plan to pursue the high-growth regional airline and business jet markets with a new generation of products to satisfy the needs of our global customer base," said Mr. Pieper. "Another valuable asset of Fairchild/Dornier is the strong relationships the company has developed with its customers and suppliers."
"I am very pleased with this investment," said Carl Albert, Fairchild/Dornier's Chairman, Chief Executive Officer and majority shareholder. "This new capital from CD&R and ACP will ensure that Fairchild/Dornier remains on track to meet the strong demand of the regional airline and business aircraft markets."
The investors will work closely with the employees and management to accelerate Fairchild/Dornier's transformation to position the company to pursue its aggressive market share goals. CD&R has previous operational experience in the aerospace industry. From 1993 to 1995, CD&R owned and operated Allison Engine Company, which it repositioned into a leading competitor.
Fairchild/Dornier designs and manufactures aircraft for a variety of markets, including airliners for the under 100-seat market; business jets; and corporate shuttles. A major component of the company's strategy has been to acquire financing to fund the development of new aircraft for the high growth regional airline and business jet markets.
Fairchild/Dornier currently manufactures the 32-seat 328JET. It is developing a larger 44-seat version called the 428JET, as well as a new generation of 50- to 105-seat airliners, the 728JET family, in line with the company's focus on products for the regional aircraft market. To date, Fairchild/Dornier has orders for more than 400 aircraft representing a value of some $8 billion. To learn more about Fairchild/Dornier, visit www.fairchildaerospace.com.
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