White knight comes to rescue of Dee Howard

Dee Howard, in Chapter 11 bankruptcy protection since mid-February, took a major step toward recovery on April 19 with selection of a winning bid for purchase of the company.

Financially strapped Dee Howard has been attempting to recover from what CEO Jim Malone described as a series of “unfortunate strategic moves and directions.” These, he said without elaboration, were exacerbated by a faltering market and September 11. Malone is also managing director of Bridge Associates of New York, the firm hired to evaluate Dee Howard and determine its options.

Malone said with Dee Howard “operating nicely within the rules of Chapter 11,” it was decided that the best option was sale of the company at auction. Final bids were due April 15, and Malone said nearly a dozen companies went through the due-diligence phase. But by deadline two bids were submitted. The winning offer came from San Antonio Aerospace, a company formed by VT Systems for the purpose of  acquiring Dee Howard. VT Systems, an Alexandria, Va.-based holding company, also owns Mobile Aerospace of Mobile, Ala., and Dallas-based DalFort Aerospace.

Malone said San Antonio Aerospace’s winning bid of $14.2 million cash also included an additional $3 million to $5 million in “other considerations.”

The bid was recommended for approval and submitted to Federal District Court Judge Leif Clark in San Antonio. A court decision is expected later this month.

If approved, Dee Howard would continue normal operations, though under the name San Antonio Aerospace. “We have every reason to believe this bid will be approved,” added Malone. “It will be good for the industry and for the city of San Antonio, and the new owner will be a great steward of the old Dee Howard.”

Dee Howard was formed in 1947 and is located at San Antonio International Airport. Its primary function has been heavy aircraft maintenance, repair and modification. In the past 18 months, the company also reemerged in the aircraft interior refurb and completion market. One of its most recent major interior completion jobs resulted in a big diplomatic flap when the customer alleged that covert listening devices had been installed in the cabin. The Boeing 767 had been outfitted with a VIP interior for the president of the People’s Republic of China. Dee Howard and the interior designer Gore Design maintained there were no security breaches during the completion process and no discrepancies were found during the acceptance inspection and test flight by Chinese government representatives.