Moravan wins tender for Let Kunovice assets

 - May 19, 2008, 11:41 AM

Czech bankruptcy administrator Zlatava Davidova has awarded the assets of bankrupt Let Kunovice to Czech lightplane manufacturer Moravan Otrokovice, ostensibly ending a complicated tender process for the sale of the former Ayres Corp. subsidiary. Moravan, which plans to retain the Let name, expects to continue production of the 19-seat Let L-410 and its Westernized sibling, the L-420, as well as to pursue a number of new projects. According

to Davidova, Moravan emerged as the only bidder that complied with the rules of the tender. The company reportedly paid 140 million Czech crowns ($3.5 million) for Let–roughly the same amount paid by Ayres Corp. when it acquired the half-century-old manufacturer in August 1998.

Moravan’s slogan–“12 projects for 1,200 people”–illustrates the ambition with which it hopes to repair the organizational decay that has plagued the bankrupt airplane builder since it landed in the hands of Ayres. Those 12 projects, according to commercial director Tomas Stefanik, would also include certification of the 40-seat L-610G–a General Electric CT7-9D-powered turboprop beset by numerous testing delays and budget shortfalls since making its first flight as the L-610M in 1989.

Moravan also plans to continue production of the Let Blanik and Solo gliders and to proceed with a series of new projects under coproduction agreements. The company currently builds the Zlin series of utility and aerobatic singles, various components for the Aero Vodochody L39, L59 and L159 light fighters; wing components for the L-610G; and landing gear wheels, brakes and ailerons for the L-410.

Notwithstanding its rather grand proclamations, Moravan will face significant hurdles in its attempt to revitalize Let, not the least of which involves some $65 million worth of creditors’ claims. Let fell into bankruptcy last October after Ayres failed to meet the stipulations of a so-called standstill agreement it entered with Let’s largest creditor, Konsolidacni Banka (KoB). A month later, Ayres Corp. itself declared bankruptcy in the U.S., leaving its largest creditor, GATX Corp., in control of the Albany, Ga. company.

Yet another creditor and one of Ayres’ most outspoken critics, U.S. entrepreneur Randall Brink, stood as one of three final bidders in the tender process for Let. According to Brink, he and a group of investors offered $30 million for the company as part of a plan to reestablish the L-420 line for Pan Pacific Airways–his proposed regional airline to be based in Seattle. However, Davidova refused to consider his bid because Brink didn’t pay a $1 million deposit as required under the rules of the tender. According to Brink, he asked Davidova to issue a revision to a legal document that would provide for the return of the deposit in the event he did not win the bidding. By the time the deadline for final submissions arrived, Brink had received no such revision and consequently refused to pay the $1 million.

“The bankruptcy administrator withheld documents essential to the submission of our bid,” said Brink. “After agreeing to revisions to the contract document, which had been very vaguely worded concerning the purpose and terms of a large cash deposit, the administrator then withheld the revised documents, allowing the time before the tender closing to expire. In my opinion it is clear she had another agenda. She was clearly more interested in money being transferred into her account than in the interests of the Let creditors.”