Fairchild Dornier seeks to stay afloat


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Jan 11, 2002
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FRANKFURT -(Dow Jones)- Struggling U.S. -German aircraft maker Fairchild Dornier Corp. received a shot of emergency aid as creditor banks agreed to give it a $20 million advance out of a possible $90 million, its preliminary insolvency administrator said Thursday.

In a statement, the administrator, attorney Eberhard Braun, said he received the advance April 3 , allowing the troubled company to carry on with business. The company expects a decision on the total sum of the loan over the next two weeks.

The $90 million would be barely enough to keep the company afloat for two months, as it burns about $50 million in cash each month, said a person at one of its creditor banks. The creditors include HVB Group AG (G.BHV), Bayerische Landesbank Girozentrale (G.BLG) and Kreditanstalt fur Wiederaufbau (G.KFW).

The entire loan faces regulatory approval, Braun said. The German state of Bavaria and the federal German government would guarantee part of it. They are due to meet Monday, Braun said.

The German government will soon ask the European Union (news - web sites) Commission, the E.U.'s executive branch, for approval of the aid, Commission spokesman Michael Tscherny said Thursday in Brussels .

Once the German government has notified the Commission, the latter has two months to approve it or to launch an in-depth investigation. The state aid would have to be repaid within six months unless it is followed by a restructuring program. But the Commission will only give a green light if it is convinced of the viability of the restructuring plan.

A court-appointed administrator took control of Fairchild Dornier Tuesday after the cash-strapped Bavarian-based firm filed for insolvency. The regional government in Munich and the federal government in Berlin pledged on the same day to guarantee bank credits designed to keep the company afloat for the next few months while it seeks a business partner.