Eurocopter, a major creditor to South African company Advanced Technologies and Engineering (ATE), has signalled its willingness to explore ways to rescue the struggling company after it instituted business rescue proceedings in September.
Eurocopter Southern Africa spokesman Linden Birns said that the global helicopter manufacturer is “concerned about ATE’s situation.”
Birns said that, “in terms of the Business Rescue Process of the Companies Act, the High Court has appointed an Independent Practitioner to identify and assess potential rescue solutions for ATE and to determine the best course of action in the interests of the company and its creditors. Eurocopter has signalled its willingness to explore – with the Independent Practitioner and local industry – potential solutions that will ensure both the continuity of ATE as a business and its ability to fulfil its various programme obligations.”
“Eurocopter’s involvement would protect vital skills, jobs, technologies and expertise in South Africa’s aerospace and defence sector. It would also secure various successful partnering relationships that characterise and are crucial to SA’s aerospace and defence industry,” Birns said. However, he could not say what Eurocopter’s involvement would entail until the rescue plan has been approved and adopted.
ATE gave notice of a resolution passed at a special Board of Directors meeting late in September to commence business rescue proceedings in terms of Section 129 of the South African Companies Act 71 of 2008.
“ATE expected certain major international contracts to have been awarded, which did not materialise in the anticipated timeframe,” the company said in a notice. “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 contemplated in Section 128 (1) (f) of the Act), 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.
Business Rescue Proceedings involve appointing a business rescue practitioner to temporarily supervise the company and the management of its affairs, business and property. The proceedings will develop and implement a rescue plan aimed at restructuring the affairs, business, property, debt, other liabilities and equity, in a way that maximises the likelihood of the company continuing in existence on a solvent basis. The practitioner has three months to table his recommended rescue plan.
The company is 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. The NWS was developed under a R500 million (US$73 million at the time) prime avionics subcontract from BAE Systems, the first time that the latter has placed such a contract with a foreign company. BAE Systems Hawk South Africa Project Director Mike Rennardson in May 2006 said the order, when placed in April 2000, was the “biggest ever contract placed on a South African private sector aerospace firm.”
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 F-1 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.
The Kiwit has an endurance of one hour at an altitude of 500 feet above ground level and can perform aerial observation tasks at ranges of up to 5km. The air vehicle weighs 3.5 kg and takes 10 minutes to assemble. It made its debut at Africa Aerospace and Defence (AAD) show in Cape Town in September 2008. At the time the company also hoped to sell the system to the SA Police Service to support Operation Kgwele, the FIFA Confederations Cup and World Cup security undertaking.
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. A prototype was unveiled at the Paris Air Show, fitted to an AS550 Fennec light military helicopter. In a joint media release the two companies say the SAWS addresses “increased market demand for helicopters incorporating a weapon system able to match evolving mission scenarios in current and future conflicts.” It was later reported the system was being developed for a Middle Eastern customer.
Business rescue proceedings are a new phenomenon in South African law and is similar to the US “Chapter 11” bankruptcy proceedings.