Tuesday, March 23, 2010

Carlyle Group Cashes Out of Vought Aircraft

The Carlyle Group exited from the remainder of Vought Aircraft Industries. Triumph Group purchased Vought for $1.44 billion, of which $525 million was cash.

In 2009 the company sold its 787 Dreamliner production facilities to Boeing. Vought had a clear history of holding up Dreamliner production. The WSJ got wind of the sale in July.

Triumph inherits Vought's $35 million Texas Enterprise Fund commitment. Under Carlyle Group ownership Vought promised to add 3,000 jobs by 2009. According to Vought employment numbers posted on their website, it cut 35 full time positions. That's $1 million per job lost. Governor Rick Perry made an executive decision, rewriting the TEF contract and effectively lowering the bar for Vought's employment promises. The company doesn't employ in eight locations what it promised for Texas.

One Carlyle commitment is history, now the responsibility of Triumph. An enterprising business professor could create a great case from Carlyle's packaging and unpacking of Vought-Aerostructures. It would need to include Vought's milking Texas and South Carolina for a combined $100 million, as well as how Vought gunked up Dreamliner production. Quotes from CEO Elmer Doty on access to capital, private equity vs. publicly traded, would be part a critical part of the case.

Triumph's stock soared on the news, up almost $8 to $70 a share. The pop makes Carlyle's win even bigger, given their 31% stock ownership in Triumph once the deal closes.

The Carlyle Group cashed in on Vought, with aims to sell ARINC. The two Vought sales are over $2 billion, $590 billion to Boeing (per Vought's press release) and $1.44 billion to Triump. That should give the PEU boys' carried interest a nice lift.

As an aside, Vought's SEC filings have not appeared on EDGAR since 11-09. One might expect a redone contract with the State of Texas to be an addendum to the company's financial statements. Will it show up on Triumph's SEC filings?