PLATTSBURGH — Laurentian Aerospace Corp. has signed an agreement with a leading Wall Street investment bank to seek funding for its proposed $200 million project here, officials say.
Laurentian Senior Vice President for Finance and Chief Financial Officer Andrew Edwards told the Press-Republican that they have retained the firm — which he would not name — as financial adviser and exclusive placement agent, charged with finding people interested in investing in the company.
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“We are actively working with that firm on a variety of things connected with the financing,” he said.
NO MORE VERDANT
In June 2006, Laurentian announced plans to build a 273,000-square-foot, two-bay hangar for maintenance, repair and overhaul of wide-body jets at Plattsburgh International Airport.
The facility was — and, Edwards said, still is — expected to create 200 jobs at start-up and as many as 900 once it is in full operation.
Financing proved difficult to obtain as the international financial crisis took hold. In 2011, Laurentian announced it had secured financing through Verdant Capital, but those funds never materialized.
“We are not in active dialogue with Verdant concerning the financing of the project, and we don’t expect that situation to change, but any specific information on Verdant will have to come from Verdant and not from Laurentian,” Edwards said Monday.
‘A GOOD SIGN’
Also on Monday, the County of Clinton Industrial Development Agency agreed to a request from Laurentian to hold a fourth public hearing on the issuance of tax-exempt bonds for the project.
The company asked that the maximum amount of the bonds be increased from $170 million to $200 million.
The date of the hearing has not yet been set but is expected to take place soon, Edwards said.
The public hearing, he said, is a technical matter and does not mean a bond offering is imminent.
The bond issuance was initially approved in 2007 and renewed in 2010.
IDA Secretary Michael Zurlo said that, while he doesn’t have details of Laurentian’s progress, it was good to see Edwards at the meeting.
“I take it as a good sign they are asking this body to take some action,” he said.
The bonds would have a 30-year term at a fixed interest rate. The IDA, Edwards said, acts as a conduit for the bond offering and would have no financial obligation or risk.
NEEDS COUNTY OK
Once a public hearing is held, the Clinton County Legislature would need to approve the bond offering, which could take place sometime in June, Edwards said.
Through its financial adviser, Laurentian would seek buyers for the bonds. It would then pay the IDA back, with interest, over 30 years.
Edwards said he could not now identify which investment bank is seeking financing.
“Most investment banks make an announcement when a transaction is completed, not when it begins, and that will be the case in our situation,” he said.
The Laurentian facility would be capable of serving all wide-body aircraft with the exception of the Airbus 380 and Boeing 747-800. There are presently three similar systems in use in Dubai by Emirates Airlines, Edwards said.
Each bay would have a laser-guided automated docking system that can set up the scaffolding and computerized work stations around the aircraft in less than an hour, he said. The work stations would also be tied into Laurentian’s accounting, inventory and financial reporting systems.
All of that is expected to greatly reduce the amount of time an aircraft is out of service, therefore reducing income lost by airlines while repairs are under way.
Edwards said the market for the project continues to remain in Laurentian’s favor — wage inflation in Asia over the past few years has been more than 10 percent annually in many areas, and oil prices remain high.
“Both of those factors increase the cost to an airline located in North America of having its heavy maintenance undertaken overseas. The natural result of those trends is that demand for maintenance services in North America should increase, and that is a very positive situation of the company (Laurentian),” he said.
“At the same time, there has been very little capacity added in North America in recent years. In fact, capacity in North America has recently declined, as some former participants in the market have ceased to be active in the heavy maintenance market.”
One of those is the Canadian firm Aveos, which went out of business in March 2012. In addition, the Federal Aviation Administration has placed a freeze on issuance of certification of repair facilities overseas, Edwards said.
“Supply is dropping, and demand is increasing.”
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