Court Clears Restart of G500/G600 Nacelle Production

 - September 11, 2018, 10:17 AM

U.S. Bankruptcy Court approval of an interim financing deal between Gulfstream and Nordam has cleared the way for production to resume on nacelles for the Pratt & Whitney Canada PW800 engines that power the Gulfstream G500 and G600. Nordam confirmed that production restarted yesterday following a nearly two-month suspension of the program. “We are ramping up production and are hiring across the organization,” the company said in a statement.

Nordam announced its suspension of PW800 nacelle production on July 5 citing “an impasse” with P&WC, which had originally contracted with Nordam for the nacelles. Later that month, Nordam filed for Chapter 11 bankruptcy protection and P&WC agreed to assign the purchase agreement to Gulfstream, according to court documents.

Approved by the U.S. Bankruptcy Court for the District of Delaware on September 6, the interim financing deal was part of a larger agreement under which Nordam would sell its interest in the nacelle program to Gulfstream. Under the agreement, Gulfstream will have “full management authority over the program, and, to the extent that [Gulfstream] 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 on September 4 filed for court approval of the agreement, as well as the interim financing deal, saying it would enable restart of production in the short term and pave the way for the company to ultimately exit Chapter 11.

Under the interim order, Gulfstream is extending the necessary financing for restart and ramp-up of the program and Nordam is agreeing to a lease of the intellectual property to the Savannah, Georgia airframer. While Gulfstream has ultimate management authority of the program, the nacelles will continue to be made at Nordam’s facilities.

The court further set a September 26 hearing date for finalization of the sale.

Court approval comes at a critical time for Gulfstream, which had secured U.S. FAA type certification for the G500 in July and has been ramping up production of its newest long-range jet. At the same time, Gulfstream has been marching forward on its certification of the larger and longer-range G600 derivative.