With court reprieve, Grob staves off bankruptcy

 - September 30, 2008, 5:14 AM

Grob Aerospace CEO Niall Olver has been given more time to secure fresh investors for the insolvent German manufacturer of the SPn light business jet. Insolvency administrator Dr. Michael Jaffé has recommended to the German court in which Grob Aerospace GmbH filed for insolvency on August 18 that the company’s bankruptcy protection be extended beyond the initial 30-day assessment period. Meanwhile, a Swiss court has also agreed to postpone bankruptcy proceedings for its Swiss-based Grob AG parent company, lifting the threat of the company’s assets being liquidated in the near future.

Olver told AIN that he is continuing talks with three prospective new investors–one from within the aviation industry and the other two financial groups. He indicated that more than €100 million ($142 million) of new capital will be required to resuscitate Grob. This amount would both replace funds withdrawn by the company’s undisclosed main investor in mid-August and provide additional money to cover the cost of completing certification of the SPn.

“All the [prospective] investors are happy with the business plan and all are aware of the risks associated with aircraft development programs,” Olver added. Evidently, the former investor had suddenly opted to withdraw financial backing after becoming frustrated with further delays in the SPn program and the rising cost of getting the aircraft into service.

Even if new investment is quickly forthcoming, whether Grob can meet its already revised goal of completing SPn certification by year-end remains a question. According to Olver, the company needs to increase its technical personnel to get the program back on track, something it had been struggling to do before declaring insolvency. However, he added, Grob still believes that once it achieves certification, it can meet its goal of delivering 35 airplanes next year.

Grob has orders for more than 100 SPns, covering more than two years of production output at Tussenhausen-Mattsies, which can produce some 48 jets annually. According to Olver, only one customer has asked to cancel an order, while other customers, including Alpha Flying’s PlaneSense fractional ownership program (which has firm orders for 25 SPns), are staying with the program. Some customers have indicated a willingness to become shareholders in Grob through a consortium of various interested parties, Olver said, but this does not appear to be the most probable source of new funding for the airframer.