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Lufthansa Technik bid for Aveos doesn’t add up: opponents

Aug. 22, 2012, Montreal – Lufthansa Technik tripled its original bid for the
Aveos engine repair business during negotiations to sell the
operation, a Quebec court heard Wednesday.

The move enabled the German company to best MTO Aero Engines with
an offer that was more than twice what the Vancouver-based company
offered to pay.

However, opponents of the deal say Lufthansa's latest bid
shouldn't have been allowed because it was submitted after a
deadline.

MTU's lawyer grilled Aveos chief restructuring officer Jonathan
Solursh about the bidding process, arguing his client's bid should
have won because it was higher by the Aug. 7 deadline, before
Lufthansa twice increased its offer.

"The process was not followed…so the late bid by Lufthansa
should not be accepted," MTU lawyer Francois Gagnon said

But Solursh insisted that the process clearly allowed for
negotiations to finalize the bids.

The union representing former Aveos employees is also trying to
block the sale of the engine repair business to Lufthansa. At stake
are potentially more than 130 jobs in Montreal and Vancouver, mostly
those of former Aveos workers.

The value of the winning bid hasn't been disclosed but MTU
offered $5.2 million including $4 million plus specialized tools.

MTU valued the tools at $1.2 million, but the chief restructuring
officer testified the amount was less than the liquidation price.

The company had been Air Canada's main provider of aircraft
overhauls and heavy maintenance.

The engine repair business is the last part of the Aveos business
to be sold. Last week, the court approved the sale of the component
repair business to British-based firm A J Walter Aviation for an
undisclosed sum. The company plans to create about 200 jobs.

Earlier, its airframe business and other assets were sold for
$10.8 million to three Canadian firms, two U.S.-based companies and
one liquidator.

The buyers of the airframe business include Avianor Inc. based in
Mirabel, Que., Avmax Aviation Services Inc. of Calgary and Discovery
Air Technical, a subsidiary of Yellowknife-based Discovery Air.

Premier Aviation Overhaul Center of New York, which has an
operation in Trois-Rivieres, Que., and Illinois-based Aircraft
Services Inc. also acquired parts of the business.

Liquidator Maynards Industries Ltd. bought several lots of
equipment that are being sold at auction

The court has delayed a decision on the Lufthansa Technik deal to
give opponents an opportunity to challenge the fairness of the
proposed transaction.

Justice Louis Gouin said he will decide the fate of the
transaction Thursday afternoon.

He cautioned that he won't second-guess the economic decision
behind the sale but will focus on the transparency and fairness of
the process.

Aveos terminated about 2,600 jobs across the country, including
some 1,800 in Montreal, when it suddenly obtained creditor
protection and closed its operations in March.

The judge granted the request for a delay after Air Canada
agreed to extend the deadline for its contract with
the winning bidder beyond its Aug. 15 deadline to meet its engine
maintenance needs for the fall season.