Pacific Aerospace/China joint venture liquidator has a complex road ahead

Just four years ago veteran Waikato planemaker Pacific Aerospace was a $30 million revenue company and its loyal staff were promised “explosive” growth was just round the corner through a new joint venture with Chinese state-owned juggernaut Beijing Automotive.

Late on Friday afternoon, the dream nosedived when the High Court granted a supplier creditor’s application for interim liquidation of the Hamilton-based company, whose legacy spans more than 70 years and has pulled out of more commercial turbulence over the decades than the Red Baron.

For interim liquidators Steven Khov and Kieran Jones of Khov Jones it’s too early to tell Pacific Aerospace’s 100-plus staff anything.

Khov said they got the call at 4pm on Friday and tomorrow would start meeting with stakeholders to understand the situation. Khov could only say the High Court application was by a supplier. He could not yet comment on what the company owes, to whom, or how many, if any, orders it has on its books.

The interim liquidators would also work with the Civil Aviation Authority, Khov said.There were follow-on practicalities to consider given Pacific Aerospace was not only an aircraft maker but also responsible for supplying spare parts for all the aircraft it has sold.

The CAA on Friday said aircraft produced by Pacific Aerospace would be able to continue flying “despite the company’s financial distress”.

But the CAA, which said it had been informed on Wednesday last week about the company’s financial status, suspended its certificates which had allowed it to design, manufacture and maintain aircraft.

Pacific Aerospace makes small aircraft. Its roots were in top dressers and pilot trainers with fully aerobatic capability, but what caught the Chinese company’s eye was its P-750 XSTOL (P-75), a multi-purpose aircraft that can take off and land on extremely short airstrips.

The aircraft’s development and 2006 certification seemed to secure Pacific Aerospace’s future after years of scratching a living and numerous corporate restructurings. It was snapped up around the world by skydiving companies and for passenger and freight transport, agriculture spraying, medical evacuation transport, firebombing, surveillance and survey, search and rescue.

The deal with Beijing Automotive, a Fortune 500 company, then with revenue of US$56 billion, was for the joint venture to build more such aircraft. Assembly work was to be shared with the Hamilton site continuing to manufacture P-750s for other markets.

Pilot and maintenance engineering training by Pacific Aerospace was to be part of the deal.

Pacific Aerospace’s then-chief executive Damian Camp, who is still a shareholder in the joint venture company through 50 per cent partner Pacific Aerospace Group Ltd, said up to 40 aircraft would be rolling out of the Hamilton site from 2017 with local staff set to double within five to 10 years.

The joint venture with China enabled the purchase of the intellectual property and assets for a Canadian aircraft, described as “a little sister” to the P-750.

Camp would not comment, referring the Herald to the joint venture board.Pacific Aerospace chief executive Mark Crouch declined to comment.

The joint venture company Pacific Aerospace Ltd has four Chinese directors, three China-based. One of the four, Auckland-based Johnson Liu Murr, is also a director of 50 per cent
shareholder Pacific Aerospace Group Ltd.

The appointment of an interim liquidator doesn’t happen often, said Khov.

The job was to step in and ensure assets and their value are preserved. An interim liquidator had the same powers as a liquidator. In the normal course of events, a creditor or creditors successful in applying for interim liquidation would go on to apply to the High Court for liquidation.

Damian Camp, a shareholder in the joint venture through his stake in PAHL Ltd, a 33 per cent shareholder in Pacific Aerospace Group, said at the time of the deal the P-750 aircraft was reckoned to be an important tool in China’s development of its general aviation.General aviation, as distinct from commercial and military aviation, enabled economic development and China was experiencing significant rural tourban shift.

The Chinese government wanted to keep people where they were by providing them with better infrastructure support with aviation links.

Camp said at the time the deal clincher for China was Pacific Aerospace’s regulatory and certification design standards.

Camp at the time of the deal was also chief executive of the joint venture company. He left Pacific Aerospace as chief executive in 2018 but remained a shareholder in the joint venture company.

Pacific Aerospace Group, the 50 per cent shareholder in the New Zealand-Chinese company in interim liquidation, is 66.7 per cent owned by ICV Finance, which 100 per cent owned by Nicsha Farac of Auckland.The balance is owned by PAHL, whose directors are Damian Camp and his brother Joshua Camp.

Companies Office records show PAHL is 50 per cent owned by Damian and Sharlene Camp of Auckland and 50 per cent by Alan Reichelmann, Jacqui Spice and Joshua Camp.

Pacific Aerospace has had several reincarnations. It even had the government as a shareholder once. Its names have included James Aviation, formed in 1949, Aero Engine Services, 1954, Air Parts 1958 and New Zealand Aerospace Industries, registered in 1972.

Pacific Aerospace was formed in 2006, the year the P-750 achieved its FAA certification.

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