Gulfstream, Nordam Reach Deal on PW800 Nacelles

 - September 4, 2018, 1:30 PM
Gulfstream Aerospace has stepped in to rescue Nordam, the engine nacelle supplier for the Gulfstream G500 and G600 that filed for Chapter 11 bankruptcy in July. (Photo: David McIntosh/AIN)

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.”

Comments

I'm VERY disappointed that AIN offers little to no behind-the-scenes or an inside view of exactly HOW and WHY a proud and long-standing aerospace company like Nordam could get into such dumb-ass straights.

It would be highly instructive to you audience clearly understand the unvarnished REAL reasons for Nordam's decline and fall.

No different than learning from the detailed reconstruction of an aircraft CFIT accident.

AIN is great for publishing timely what's happening articles... but little to no backstory nor deeper context.

Yesh, I get the entire "dispute with PWC" ostensible reason... but are industry management and life lessons to be learned beyond just regurgitating standard issue Press Releases?

Does AIN not reveal the inside story because you are worried about offending advertisers in a powerful industry?

You've got a great suite of publications, but I find hard-hitting investigative journalism and "insider" storytelling missing.

Comments anyone?

First, let me address advertising. Advertising plays no part in what stories we cover or how we cover them. We at AIN have lost advertising due to what has been published, and the publishing/advertising side has always backed up the editorial side in these circumstances. I dare you to find a better aviation magazine in this regard.

The problem with getting more background info on this particular story is non-disclosure clauses signed between the involved parties and the fact that Nordam is a private, family-owned business. We can't report what we can't get – it's really as simple as that. The writer did mainly use information from filed lawsuits to write the majority of the stories (plural) related to this issue. She also queried the companies for more info, but none would comment on litigation. It certainly was not for lack of trying on our part. Perhaps maybe later someone will talk, but for now, you know as much as we do.

Chad-

Thank you for your prompt response and clarification...

I'm very happy to know that Advertising does not impact Editorial at AIN; kudos!

That Nordam is a private, family-held enterprise certainly presents a challenge for deeper due diligence on this story.

The reason I'm concerned about it is that this is actually a pretty big story... and context is both decisive and instructive for your readers.

The aerospace industry is a bit of a mesh network when it comes to advanced technology suppliers and the critical role they play in allowing OEM airframers to make good on delivery target dates.

Perhaps it would be worthwhile for AIN to do an in-depth overall article about the relative health of today's supplier network and how one vendor or supplier's technical failure (think Safran-Hemisphere) or a financial failing (Nordam-Gulfstream) really rattles the whole ecosystem.

AIN does a great job with accident recaps and lessons learned; they are equally important on the business side.

Thanks again!

Samuel R. Kephart

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