Deal Still In Work

Boeing told its Wichita employees Friday that their 60-day layoff notices were extended for an indefinite time. Onex executives still expect the deal to close in June, but there are numerous issues to address.

One of the major challenges for Onex is to establish new labor contracts with the labor unions. Thomas Buffenbarger, International President of the International Association of Machinists & Aerospace Workers, met with former Congressman Richard Gephardt, acting as a consultant hired by Onex to help reach agreement with the unions.

"Hopefully, these talks have laid the groundwork to resolve some of the major issues that have kept the parties apart throughout this negotiating process," said a memo signed by Machinists Union District 70 President Steve Rooney according to the Wichita Eagle.

Even after they reach agreement with the unions, Onex will face multiple restrictions in this deal. The 113-page Asset Purchase Agreement filed with the Securities and Exchange Commission spells out a variety of conditions for the purchase of Boeing's commercial operations in Wichita, Tulsa and McAlester, Oklahoma.

Onex must keep the bulk of manufacturing work and the headquarters in Wichita for ten years, although if they give up control of the company, the timeframe is reduced to five years.

Onex will pay $900 million in cash and undertake some liabilities bringing the deal total to around $1.2 billion, depending on conditions at the time of closing.

Onex will put at least $375 million down at closing, and will finance the rest of the purchase. Boeing agrees to keep work currently done at Wichita with Onex providing production and cost saving obligations can be met. Also, Boeing has agreed that Onex will be given the chance to bid on new work for the first eight years. Boeing must send at least $50 million of work annually to Onex or pay a penalty.

FMI: www.onex.com, www.sec.gov