Fairchild Dornier secures lifeline

Fairchild Dornier has received the first tranche of a E100m bridge financing loan as it looks to stave off bankruptcy.

Three German institutions have agreed to provide German aircraft manufacturer Fairchild Dornier with loans totalling E100m, according to German business newspaper Handelsblatt. The loans, provided by Hypovereinsbank, Bayerische Landesbank and the Kreditanstalt für Wiederaufbau (KfW), are aimed at keeping the company afloat while it seeks a buyer.

E20m has been made available to the firm instantly, with the remaining E80m still to be paid. The loans are to be partially covered by a guarantee from the federal and the Bavarian state governments.

Hypovereinsbank and Bayerische Landesbank were part of the original consortium that backed the $1.2bn buyout in April 2000 with $800m of debt, 80 per cent secured by loan guarantees from the German government. Financial sponsors Clayton Dubilier & Rice and Allianz Capital Partners provided $300m and $100m respectively for the acquisition of the world’s third-largest aircraft manufacturer. eFinancialNews reports that both firms are planning to write off their investments.

Fairchild Dornier announced this week that it would cut half of its 600 workforce in the US as part of a move to reduce costs. No decision has yet been taken on the firm’s 2,600 German workforce.