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Wednesday, August 16, 2000
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Bank pulls LET agreement after Ayres fails to give boost to management By Frantisek Bouc LET is owned by U.S. company Ayres Corporation. Under the temporary settlement agreement, the debt-ridden LET hasn't had to pay interest since mid-June on its 2 billion Kc ($51.3 million) debt to Konsolidacni banka, the largest administrator of risk claims in the Czech Republic. Konsolidacni spokesman Jiri Pekarek said that parent-company Ayres' failure to meet promises made to Konsolidacni prompted the bank to cancel the temporary settlement. "Ayres had declared that they would boost LET's management, but they didn't do that. Also, they failed to bring new capital in the company," Pekarek said. Abolishing the settlement agreement will force LET to start paying off its debts -- at least interest payments -- with Konsolidacni, despite the firm's serious financial woes. Pekarek said, however, that Konsolidacni will provide LET with a "transition period" lasting until the end of August. That will enable LET to negotiate with potential investors about entering the company. Possible investor According to a source close to Konsolidacni who requested anonymity, Ayres has kicked off negotiations with Israel Aircraft Industries (IAI), a company focused on aircraft and arms production. LET general manager Turner Bostwick refused to comment on the issue, and Pekarek said only that the Kunovice-based firm has informed Konsolidacni about a potential strategic partner. "It should be a renowned company with experience in the aircraft industry," Pekarek said. Milan Holla, president of the Czech Republic's Association of Aircraft Producers, said that IAI could become an effective strategic partner for LET. "In contrast to the small company Ayres," Holla said, "IAI is a quickly expanding firm in both the civilian and military sectors." In the first quarter of 2000, IAI reported profits of $24.7 million (939 million Kc). Last year, the Israeli firm cleared $2 billion in revenues. Meanwhile, LET's revenues in 1999 reached 516 million Kc, and the company ended the year with a 580 million Kc loss. LET has faced economic woes since 1990 because of plummeting sales. Ayres Corporation bought into the company in 1998, but that didn't lead to significant improvements. LET employees were reported to have received only half of their wages since January 2000, and unpaid wages led the LET unions to announce a strike alert in mid-June. If LET's negotiations with the new strategic partner fail, bankruptcy might be inevitable -- placing more than 1,400 jobs in jeopardy. Frantisek Bouc's e-mail address is fbouc@praguepost.cz More Business stories
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The Prague Post, a weekly newspaper published in the Czech Republic.
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