Some Question Purchase Of $100 Million In Piper Debt

Let's say you're preflighting your aircraft, alone on the ramp in the pitch of night, when suddenly, you hear a hushed voice from just a few feet away. "Pssst, buddy. Have I got a deal for you." What would your first reaction be? For a lot of us, we'd ask, "What's it gonna cost me?"

That's a question asked in Sunday's Vero Beach (FL) Press-Journal. In an editorial on New Piper's new-found friend, American Capital Strategies, the paper urges "cautious optimism." ACS has purchased $100 million in debt from the struggling GA manufacturer, giving New Piper a little breathing room after a round of bitter layoffs and a cloudy horizon to boot. But the debt purchase is little more than a brief respite for New Piper. Says the Press-Journal, "Clearly, despite the newfound financial support, Piper must still stand on its own. That's no mean feat in the aviation sector whose ongoing slump has depressed sales and erased profits. Given those difficult odds, Indian River County would be well-served to continue its pursuit of diversified business development. Until this area begins attracting significant numbers of well-paying jobs, the local economy remains vulnerable."

ACS has a somewhat spotty record of late.

While, according to the Vero Beach paper, the financial provider is certainly no debt vulture, it has pulled out of seven ventures so far this year. "(A)nalysts have noted recent slippage in its loan performance," said the editorial. "This has trimmed both valuation and stock price." The question may be, how long will ACS maintain the status quo.. or is additional financing in the offing (as rumored) to restore New Piper to a position of prominence?

FMI: www.newpiper.com, www.american-capital.com; editorial