Advanced Technologies and Engineering (ATE) has not been allowed to implement business rescue proceedings to resuscitate the company, following a judgement by the North Gauteng High Court concerning ATE South Africa and its shareholders.
The board of directors is now negotiating with a number of international investors from the aviation industry who are interested in investing in ATE, which would enable ATE to be restored to full health and make an offer to creditors, suppliers and stakeholders, “which will surpass the offer in the former so called business rescue plan to a significant and material degree”, the company said in a statement.
The judgement, on June 6, declared that the resolution passed by ATE in September last year to commence Business Rescue Proceedings has lapsed and become a nullity (as if it never existed). In a statement ATE said that applications to appeal the judgement were dismissed on June 13. “Any further prospect of pursuing appeals against the judgement can be discounted, bringing finality to the matter.”
ATE’s Business Rescue Practitioner Karl Gribnitz said his investigation of the affairs of the company showed that ATE South Africa is owed in excess of R150 million, “which has become uncollectable from other companies in the ATE Group.” He said the contracting approach of the ATE Group resulted in “inefficient cost structures, the company being removed from the end-customers and cash being ‘trapped’ by other ATE Group of companies and not coming into the company in a timely manner.
A special Board of Directors meeting held on September 26 last year resolved to commence Business Rescue Proceedings. In a statement in early October, the company said that “In September 2011, a substantial foreign debtor of ATE defaulted on an undertaking to make a large payment of several overdue invoices, which caused ATE to become financially distressed…as it became likely that ATE would not be able to pay all of its debts, as they fall due within the ensuing six months.”
Gribnitz noted in one instance a pre-payment of R85 million was made “but this was never transferred to … [ATE SA], even though the company is the main industrial centre of the group. In another case, pre-payments were paid over to the company but profits were still being held overseas.” He cautioned that even if the Business Rescue Plan was accepted, the company would make a loss of R50 to R60 million for 2012.
Gribnitz proposed a rescue plan last year that would enable the company to overcome the R150 million debt owed to it. On December 13, the plan was adopted by 99.72% of creditors, but crucially the shareholders voted against it, with ultimate shareholder Jean-Marc Pizano rejecting Gribnitz’s plan. ATE and Pizano then went to court to decide on the matter.
As a result of the ruling, Pizano in a statement said that, “full unrestricted control of ATE has been vested in its board of directors with immediate effect and Mr Jean-Marc Pizano was reinstated as Chairman of the board of directors and was appointed as Chief Executive Officer of ATE with immediate effect.”
In the statement, ATE said that “it is important to note that ATE was able to sustain itself for eight months, since it was put under supervision in business rescue in October 2011, from its existing contracts and the only external funding provided was a once off loan of 1.8 million euros in November 2011. All other funding required by ATE to sustain itself was derived from existing contract work.”
ATE South Africa said it has entered into new contracts with a number of customers “such that there are no transactions with the ATE Group any more.” Contracts have been concluded with Eurocopter and customers in South Africa and Azerbaijan. Future business may come from Algeria.
ATE is an important player in the South African defence market. It is the design authority for the navigation and weapons system (NWS) of the South African Air Force’s fleet of 24 BAE Systems Hawk Mk120 lead in fighter trainers.
ATE has previous experience in this field, having developed the avionics for the Rooivalk attack helicopter, the Pilatus Astra primary trainer and the NWS and mission computer for the Spanish Air Force’s Mirage F1 upgrade. The company also modernised a number of Algerian Air Force Mi-24 attack helicopters. ATE’s NWS is a fully configurable “glass cockpit” integrated with an advanced navigation and mission computer system and an `intelligent’ stores management and weapons-delivery system.
ATE is also the original equipment manufacturer for the SA Army’s Vulture unmanned aerial system (UAS), acquired under Project Klooster. There has been speculation that a system was sold to China. In June 2009 the company said it had won a first export order for its Kiwit Mini Aerial Observation System (MAOS). A company spokesman said the sale was to an undisclosed Asian country.
Also in June 2009, ATE and European helicopter giant Eurocopter announced they were developing a new-generation Stand-Alone Weapon System (SAWS) suitable for any of the EADS subsidiary’s light and medium helicopter products. Eurocopter and ATE are jointly designing, developing, manufacturing and supporting the SAWS. The SAWS has been ordered for the EC 635 for an undisclosed international customer and will be delivered early this year. In the future ATE will integrate the SAWS onto other helicopters as part of its collaboration with Eurocopter.