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Fri, Dec 28, 2007

Cirrus IPO Rumors 'Not Exactly As Reported...'

Cirrus 'Not On The Block' Right Now

No matter which way you look at it, the general aviation landscape for 2008 may look very different from just a year ago... but not nearly as much as some recent reports might suggest.

"Bah-Humbug..." notes Alan Klapmeier who seems somewhat bemused and disappointed in the way that some of his recent remarks were portrayed in a 'Mergermarket' financial article that hit the wires Thursday. The gist of the reporting (especially the title) in an article that has appeared in such publications as London's Financial Times, seems to suggest that Majority Stockholder, Arcapita, wants to sell its stake in Cirrus Design with some sense of immediacy.

"Nothing could be farther from the truth," reports Cirrus Founder Alan Klapmeier. 

Klapmeier told ANN, exclusively, that he did make some related remarks in a recent interview, but that the genesis of the Arcapita rumors revolves around an innocent remark that Alan made that simply asserted that, like all other investors, sooner or later Arcapita would like to profit from their investment... The published report, however, seems to suggest that Arcapita might want their "money back" in the near future. Klapmeier assured ANN that this suggestion was, "way off the mark."

The article posits that Arcapita, which owns 58 per cent of Cirrus Design, wants out. The article also quotes a number of unnamed sources in regards to potential buyers or bidders for the company. One unnamed source, reported to be familiar with the company, apparently says that Arcapita has sized up a new GA playing field on which Cessna has a competitive, high-performance composite low-wing, and decided its best bet is to sell either its stake in Cirrus, or the whole company, to someone else. The Financial Times report adds that it has interviewed various industry sources which predict likely bidders for Cirrus to be Diamond, Bombardier, Embraer, or even Cessna.

As previously reported by ANN, Arcapita/Cirrus was reported to be considering a bid for the assets of Columbia, but after several days of due diligence, declined to compete in the bidding, which was ultimately won by Cessna.

Klapmeier does tell ANN that a number of legal/financial resources have been brought into Cirrus's plans, of late, in order to look at the future of the company. Klapmeier notes that such resources make sense for a company that will do at least $350M in business in the next year and is about to embark on a more fast-paced research and development program that will result in a certified personal jet aircraft for the GA market within a few years. As a consequence of that strategy, CD is consulting with Financial experts at Credit Suisse and JPMorgan, as well as a number of qualified law firms to evaluate its future plans.

"We're doing what any company needs to do at this stage of our development... but Arcapita has been a big part of our success for several years now and we have no indication that they won't still be, any time soon."

One aspect of the article that Klapmeier agrees with, reported his feelings that the industry has great growth potential, and that Cirrus is always, quote "...looking for partners who agree with that."

FMI: www.cirrusdesign.com

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