Wednesday, January 17, 2001

Bidding for LET is on the runway American customer among seven bidders interested in troubled aircraft maker By Frantisek Bouc Interest in the country's largest and most beleaguered aircraft producer is finally starting to take off. At least seven buyers are eyeing the debt-ridden LET Kunovice, a 1,120-employee company declared bankrupt four months ago. Though those close to the deal are keeping the identities of the interested parties quiet, U.S.-based Pan Pacific Airways, a former LET customer, has acknowledged it's among the pack. "We are keenly interested in taking over LET and leading it to revitalization," said its president, Randall Brink. Pan Pacific -- the only American company interested, according to sources close to the deal -- is now going over a detailed turnaround plan with LET's forced administrator. It includes the formation of a new company, CzechAmerican Aero, which would take over LET's South Moravian operations should it win the bid, Brink said. There will also be the creation of a new, more qualified management team and the possible dumping of LET's Loadmaster aircraft, a project the current company's management pins many future hopes on. LET's creditors began meeting Jan. 8 and started sifting through 102 claims worth 3.4 billion Kc ($91.9 million) -- a figure that doesn't include one significant chunk of LET's debts: wages. The majority of the company's 1,120 workers have been on forced leave for six months, and those who are left have been receiving only 60 percent of their salaries since December 1999. The three-member creditors' committee will decide by the end of February which of LET's assets will be sold. "I've reached an agreement with creditors to sell the functioning core of the company, including employees, stock, know-how and other intangible assets," said Zlatava Davidova, LET's forced administrator. The sale could be completed as soon as nine months from now, she added. LET has been struggling since 1990, when its sales started falling as it faltered in a new environment of competition. In 1998, U.S.-based Ayres Corp. bought into the faltering company, but it didn't lead to a significant improvement. LET's employees haven't received about 40 percent of their wages for the last year, and as a result, LET's unions announced a strike alert in mid-June. LET averted a strike, reaching a "standstill agreement" with Konsolidacni banka (KoB), the state-owned bailout bank and LET's major creditor. The agreement allowed LET to draw up a new business plan, enabling the company to operate until the end of 2000. But KoB later withdrew the agreement, after Ayres failed to meet its obligations to boost LET's management and to bring in new financing. Pan Pacific, ironically, was the company that filed the initial bankruptcy petition against LET, though it was quickly joined by LET's staff, Konsolidacni banka and the Prague-based Aircraft Research Institute. Pan Pacific's Brink says LET has substantial untapped potential in its factory, but acknowledged that "no company coming into LET is going to realize watershed or windfall profits. "But what I think will happen is what is already happening to a degree, and that is that interested parties, rather than slugging it out against each other, will find a way, through collaboration to either combine efforts, merge or propose to have LET divided in such a way that makes economic and practical sense," he said. Frantisek Bouc's e-mail address is fbouc@praguepost.cz More business stories Industry on the chopping block Falling demand for beef starts to claim victims in meat processing business First convicted tunneler gets 10-year term Matoulek sentence is boost to troubled fight against economic crime Daewoo pulling toward partner? Italy's Iveco rumored to be interested in Prague truck facility Cashing in on Prague's leaky water pipes Bids from France, England exceed even optimistic predictions Health insurer cracks down on unpaid bills Large companies worry plan would thwart restructuring Spaces & Places Portland plans a telehouse Movers & Shakers Musical Deloitte chairs