Wednesday, July 1, 2009

Boeing in Talks to Buy Carlyle Group's Vought Aircraft (South Carolina Operations Only)

Boeing recently announced another delay in 787 Dreamliner production. Again? Oddly, it's also in talks with Vought Aircraft Industries, a key link in the delay chain. Boeing may purchase the Charleston, South Carolina facility doing fuselage assembly. The WSJ reported:

Boeing Co. is in negotiations to purchase operations from one its main suppliers, as part of an effort to gain more control over the supply chain of its troubled 787 Dreamliner program, according to a person familiar with the matter. Boeing is close to announcing that it will buy a facility from Vought Aircraft Industries that makes sections of the 787 fuselage.

Last year, Boeing bought a joint venture near the same facility, one partially owned by Carlyle's Vought.

Last year, Boeing also moved to roll up another supplier operation owned by Vought. In March 2008, it announced it was acquiring Vought's share of Global Aeronautica LLC, also in South Carolina, which does fuselage sub-assembly.

Vought's CEO blamed the Global Aeronautica start up delay on an "internal liquidity" crisis. Isn't access to capital Carlyle's speciality? Didn't Carlyle earn their $2 million annual management fee?

Regardless of poor performance, SEC filings show Vought earned $47.1 million on the sale of their interest in the joint venture.

The Carlyle Group's reputation as an operator could take another hit, but they're quite skilled at keeping their good name out of the news. There are many unshared stories: LifeCare Hospitals, SemGroup, Hawaiian Telecom, Edscha, Carlyle Capital Corporation, BlueWave Partners, IMO Carwash, ManorCare, Landmark Aviation, Standard Aero, and Booz, Allen, Hamilton. There's more than one Vought story, as the firm paid $1.5 million to settle a discrimination lawsuit.

Don't forget about Carlyle's buying their way out of a New York pension "pay to play" investigation. It cost $50 million to release Carlyle and their joint venture energy holding, Riverstone. Anybody see a U.S. Mint green pattern?

Watch for some Texas Hold 'Em slight of hand over Vought's $35 million promise to add 3,000 jobs in Grand Prarie by 2009. These greased PEU's are hard to nail down. (PEU stands for private equity underwriter.)

(Update: The Seattle Post Intelligencer says it is a done deal)