Former Columbia Sales VP, Rich Belzer, Reports To ANN

Another hearing was held, Monday in Oregon, in the continuing legal drama surrounding the future of bankrupt Columbia Aircraft. Former Sales Veep, Rich Belzer, was in attendance and filed this report for ANN: 

Is it the presence of Cessna that has brought bidders for Columbia Aircraft's assets out of the woodwork? Or... were potential bidders mislead about the value of the company this summer and are now back because the price has fallen off a cliff?

The highlight of (Monday's) Columbia Aircraft bankruptcy hearing was the testimony of Philip M. Comerford, Jr., Managing Director of ING Capital, the firm responsible for locating a suitable buyer for the troubled aircraft manufacturer and closing a deal. 

In direct testimony, Comerford laid out the process used to contact and provide information to 16 prospective buyers, 5 of whom actually visited the company's factory in Bend OR.  No offers for the company were received, leaving Cessna's offer to acquire the company's assets and selected liabilities out of a bankruptcy which was filed in late September as the lone opportunity.

At issue is the Break-Up Fee of $500,000 which, in the motion filed by Columbia Aircraft, would be due to Cessna should they lose the auction to a higher bidder. The company's attorneys contended that Cessna's actual expenses should be rounded up to $0.5 million by virtue of the bidders their presence has attracted.

But under cross-examination by the attorney for Park Electrochemical, it became clear that Park felt that Comerford had provided an approximate valuation of between $80 and $100 million, thereby discouraging Park from proceeding further with their due diligence.  Comerford claimed that he had never mentioned a valuation amount to anyone and that Park must have reached the conclusion that the company was worth that much by reviewing its balance sheet. 

In later testimony, however, Comerford admitted that Columbia Aircraft's balance sheets showed no shareholder value and did not include the company's most significant assets, its FAA Type Certificates.

Whether frightened off by big numbers provided by ING Capital or somehow concluding that the valuation would be high based upon a review of Columbia Aircraft's meager balance sheets, it is clear that Park Electrochemical is serious now. Their plan is to send 21 people in to Columbia Aircraft next week to complete their due diligence.

In other developments:

• The auction has been delayed by six days and will be held on November 27. Due to concern by potential bidders as to whether Columbia Aircraft can be trusted to qualify potential bidders, the judge will participate at 8:00 am so that any possible disqualified bidders can obtain a ruling before the auction proceeds.
• Potential bidders represented by counsel were: Cessna, Granger Whitelaw, Versa Capital Management, Park Electrochemical and Cirrus/Arcapita.
• A settlement has been reached with Lance Neibauer on two of his lawsuits against Columbia Aircraft. Payment of the settlement amounts (not mentioned) will be made out of the proceeds of the asset sale.
• ING Capital never contacted Cirrus as a potential buyer for Columbia Aircraft although they did contact Cessna and Piper. The rationale was that Cirrus was a direct competitor (Cessna and Piper are not?) and the company did not want to provide them with confidential information. Did anyone consider that information on Columbia Aircraft's composite manufacturing processes might be of considerably more value to companies that have never certified a composite aircraft (Cessna and Piper) than it would be to Cirrus -- which obviously has?

The judge seems determined to provide a level playing field for all bidders. The due diligence is in the works; the excitement begins again after Thanksgiving.

ANN thanks Rich for the inside scoop on a matter that will keep the GA world guessing for many weeks (and months?) to come. ANN, of course, will keep you updated...

FMI: www.flycolumbia.com