Nordam has reached an agreement to sell its interest in a nacelle program to Gulfstream Aerospace Corp. (GAC) in a move that will pave the way for immediate resumption of nacelle production for the Pratt & Whitney Canada PW800 engines that power the Gulfstream G500 and G600 and ultimately allow Nordam to file a plan to emerge from Chapter 11 bankruptcy protection, according to court documents filed today. Nordam announced its suspension of the PW800 nacelle production on July 5, citing “an impasse” with P&WC, and then filed for Chapter 11 later that month.
Under the agreement, Gulfstream will have “full management authority over the program, and, to the extent that GAC elects, all shared assets and services used by Nordam both in the program and in other non-program operations,” such as personnel and equipment associated with the program. In exchange, Gulfstream would assume $18 million of “third-party vendor and contract counter-party liabilities.”
Nordam asked the court for approval of a related interim funding agreement, which the company said will permit it to “resolve the single-largest issue in these Chapter 11 cases on highly favorable terms for all stakeholders,” facilitating a restructuring plan to emerge from Chapter 11. The interim agreement would enable the license of the intellectual property to Gulfstream in advance of the sale and immediate resumption of production at Nordam's facilities.
Noting “an urgent need to restart this critical aspect of [Gulfstream’s] supply chain,” Nordam asked for approval of the request by September 10 (for production restart then) and the possibility of closing on the sale to Gulfstream by October 31.
“Suspending a customer’s program and impacting them, their customers, our stakeholders and supplier/partners is not something that should ever happen,” Nordam CEO Meredith Siegfried Madden said in a statement. “This solution that we were able to quickly reach with Gulfstream will reduce the impact of the temporary suspension and allow all program activities to resume…This settlement agreement is the best outcome for everyone involved. Gulfstream gets to build its business jets; it allows Nordam to continue under our family’s ownership and leadership; it secures our stakeholders' and company’s future; and allows us to pay all of our suppliers, continuing our strong relationships with them.”