18 June 2024
Buy an aircraft manufacturer with a certified product and also selling in the Light Sport Aircraft class for, what? £100 million? Try again and aim low: just over £12m.
Yes, that’s the winning bid for the assets of ICON Aircraft, the developer and manufacturer of the ICON A5 amphibious aircraft.
£134m ($170m) worth of debt was written off during the bankruptcy case for ICON Aircraft when it came before Judge Craig Goldblatt in Delaware last week.
The winning bid came from a unit of 160-year-old German textile machinery producer Durkopp Adler. Hang on… why would a manufacturer of textiles want an amphibious aircraft maker? It’s a complicated story:
Icon Aircraft had already selected SG Investment America Inc. as the stalking horse bidder – the back-up in case of no better bids.
However, SG Investment is a newly formed subsidiary of Durkopp Adler GmbH, now owned by ShangGong Group based in Shanghai, China, which makes sewing machines.
According to Law360, a legal reports website, a group of Icon investors — including former directors, officers and founders and other equity holders — filed legal claims against the company’s Chinese majority shareholder in the bankruptcy court, urging it to halt the company’s proposed sale. The group said the stalking horse bidder is indirectly controlled by the debtor’s current majority holder.
“The group of equity holders had asked the court to evaluate what they called ‘insider relationships in play'”, said Law360.
“They alleged that the majority shareholder, Shanghai Pudong Science and Technology Investment Co. Ltd., which has been the controlling equity holder of ICON since 2017, seized control of the management, operated the company as its own property, and systematically dismantled it to expropriate Icon’s intellectual property to China.”
In other words, ICON has been bought for a song from its main shareholder, writing off its debts in the process and ending up with the Intellectual Property of the aircraft OEM.
The Delaware court is due to approve – or not – the deal this week.
UPDATE 20 June 2024: The bid from SG Investment has been approved by the Delaware bankruptcy court but not before a last minute offer of $15.79m from another bidder, Linden S Blue, co-owner and founder of General Atomics, a US military hardware manufacturer (Predator drone among other things).
It forced SG to raise their bid to $15.8m which was accepted by the judge hearing the case. The judge moved quickly because, reports Law360, ICON Aircraft is ‘burning through $750,000 to $850,000 a week’ to maintain operations, and a quick decision was paramount.
