Onex To Buy Plants In Kansas and Oklahoma
The Boeing Company and Onex Corporation say they've reached an
agreement under which Onex will acquire the Wichita/Tulsa Division
of Boeing Commercial Airplanes.
The transaction includes Commercial Airplanes facilities and assets
in Wichita, Kansas, and Tulsa and McAlester, Oklahoma. Transaction
consideration to Boeing includes approximately $900 million cash,
transfer of certain liabilities and long-term supply agreements
that provide Boeing ongoing cost savings.
The single-source supply agreements cover the structures and
parts currently produced by the Wichita/Tulsa Division, providing a
stable base of revenue for the new business to build upon. In
addition, the Wichita/Tulsa operations will continue as a major
partner on the 787 Dreamliner.
The sale is expected to close during the second quarter of 2005.
Boeing expects to recognize a non-cash loss on the transaction
attributable to the transfer of pension related assets and
liabilities. Recognizing these non-cash charges at closing will
reduce future pension expenses. Boeing Integrated Defense Systems
operations in Wichita and Oklahoma are not included in the
transaction.
"This agreement fully
supports our strategy to focus Boeing on large-scale systems
integration, which is where we are most competitive and can add the
most value to our airplanes and services," said Boeing Commercial
Airplanes President and Chief Executive Officer Alan Mulally.
"Boeing will benefit from lower procurement costs and the
Wichita/Tulsa operations now can grow by winning new business with
other customers."
Mulally said Boeing selected Onex based on its successful
history of investing in and growing companies.
Onex will form a new company to operate the facilities. The plants
will continue to operate under the leadership of Jeff Turner,
currently vice president and general manager of the Boeing
Commercial Airplanes Wichita Division, who will be the new
company's CEO.
"Onex has a strategy to build the most efficient and innovative
company in the aerostructures industry. We intend to invest over $1
billion in Kansas and Oklahoma in the next few years," said Seth
Mersky, an Onex managing director.
Mersky said Onex's vision is to grow the value of the
Wichita/Tulsa operations over a number of years.
"We are committed to working in close partnership with the
current Wichita/Tulsa senior leadership team to make the transition
as seamless as possible," added Nigel Wright, another Onex managing
director. "The new company will compete for work inside and outside
of Boeing, providing potential for more, and more stable, jobs. The
key is to get the cost structure right."
Boeing announced in
April 2004 that it was studying the possible sale of its plants in
Wichita, Tulsa and McAlester. Boeing included balancing the
interests of employees, customers, shareholders and its plant
communities in its criteria for the decision.
"We firmly believe that this decision provides the best
available outcome for the Wichita/Tulsa Division and its plant
communities by creating new opportunities for sustained growth as a
separate operation. Onex shares this perspective, and we look
forward to a long and productive relationship together," Mulally
said.
Approximately 9,000 Commercial Airplanes employees currently
work at the Wichita, Tulsa and McAlester sites. The division
incurred approximately $2.2 billion in annual costs for 2004. The
facilities currently supply Boeing with fuselage and other
structural components for the 737, 747, 767 and 777 programs, and
the division is a supplier partner on the 787 Dreamliner.
The transaction is subject to a number of conditions before
closing, including U.S. government reviews.
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