Whilst visiting Wonderboom National Airport in order to meet with customers and take pictures for African Pilot’s April edition, we also visited the AHRLAC manufacturing facility, which was clearly ‘locked up’ with very few staff members at the facility.
It appears that Paramount Aerospace Holdings, a subsidiary of Paramount Group, has made an application for the commencement of business rescue proceedings for the Aerospace Development Corporation (ADC). Paramount Aerospace Holdings and the Potgieter family each have 50 percent stakes in the Aerospace Development Corporation (formerly AHRLAC Holdings). On 28 February Paramount made an application to the North Gauteng High Court for the company to be granted Business Rescue status. It was reported that “Paramount Aerospace has been engaged for more than five months in intense negotiations between the shareholders of ADC, in order to ensure the sustainability of the company, but it appears the board has reached a deadlock. Despite Paramount’s best efforts to resolve the deadlock and to inject new capital into the business, the shareholders, unfortunately, could not reach an agreement,” Paramount said in a statement on Monday.
According to Philip Coetzer, the lawyer for the Potgieter’s, the AHRLAC factory has been shut down and around 140 employees sent home and they did not receive January or February salaries. The company has invested heavily in machine tools to make many of its own parts as part of a policy of self-sufficiency in its entire design and manufacturing process. According to the media report, the conflict between the Potgieter’s and Paramount stems from alleged misappropriation of intellectual property and funding obligations from Paramount. Coetzer said he would challenge Paramount’s business rescue submission on the basis that this has been brought to court as a matter of ‘urgency’. Coetzer said granting the business rescue on the basis of urgency would be an abuse of rules. He said he expected the application to halt business rescue would appear before the court on Thursday this week.
Coetzer said he would also be calling for an investigation into what he termed ‘unlawful alienation’ of intellectual property from AHRLAC. According to the same media report, a Paramount lawyer has denied this. Coetzer has also alleged that Paramount has violated the shareholders’ agreement with the Potgieters. He says under the agreement, Paramount has an obligation to provide cash to AHRLAC in order to finalise the product.
Paramount said that “over the past nine years, Paramount Aerospace and its affiliated companies have significantly invested their own capital, as well as supported and underwritten the raising of third-party funding to the tune of hundreds of millions of Rands. This was done in support of what is a truly unique global aerospace project and we remain dedicated to supporting the programme and seeing it through to fruition.”
Paramount added that it “fully supports the company and we believe very strongly in the programme. We are therefore fully committed to the Business Rescue process. The Business Rescue Practitioner will be supported to raise immediate funding so that the employees and creditors of ADC can be paid.”
As one of South Africa’s largest defence companies, Paramount is owned by the Ichikowitz family and has a large presence in a number of technology areas and markets. Since it is privately owned, little is known about Paramount’s revenue breakdown.
The Advanced, High Performance, Reconnaissance Light Aircraft (AHRLAC) is a turbine powered pusher propeller aircraft, designed as a lower-cost alternative to unmanned aircraft for the reconnaissance and attack roles. The aircraft first flew in 2014. Paramount Group is the launch customer of the aircraft and placed a number of orders for the aircraft. Despite having paid in full for the aircraft, Paramount says it is still awaiting delivery. The programme manager of AHRLAC is Paul Potgieter Jr, whose father Dr Paul Potgieter was Managing Director of AeroSud and headed the Rooivalk attack helicopter development team in the 1980s.