Ahrlac

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Re: Ahrlac

Unread post by Jack Welles » Sun Mar 03, 2019 10:11 am

Thanks for that, Peregrine. Interesting info. Corporate shenanigans.

Any chance you can put a date on that news report?
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Re: Ahrlac

Unread post by Peregrine » Sun Mar 03, 2019 10:13 am

Jack Welles wrote:
Sun Mar 03, 2019 10:11 am
Thanks for that, Peregrine. Interesting info. Corporate shenanigans.

Any chance you can put a date on that news report?
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Re: Ahrlac

Unread post by Ugly Duckling » Sun Mar 03, 2019 12:50 pm

Peregrine wrote:
Sun Mar 03, 2019 9:57 am
BDF3BAEC-5696-4B46-A02C-61ABBB9714F4.jpeg
Not all doom & gloom.
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Re: Ahrlac

Unread post by pwnel » Sun Mar 03, 2019 9:37 pm

Ugly Duckling wrote:
Sun Mar 03, 2019 12:50 pm
Peregrine wrote:
Sun Mar 03, 2019 9:57 am
BDF3BAEC-5696-4B46-A02C-61ABBB9714F4.jpeg
Not all doom & gloom.
Well I wouldn't put my money on it. Unfortunately South Africa suffers from this type of thing time and time again. We have amazing engineers who often build products way ahead of anything else in the market but we're terrible at scaling, marketing and business in general. Here's just a couple of examples:

- Sunspace - with all the ability in the world to build micro-satellites, launched two in a decade. (Planet.com has 300+ micro-satellites flying)
- Joule Electric car project - died in 2012 - https://en.wikipedia.org/wiki/Optimal_Energy_Joule
- Rooivalk - amazing product, never sold outside SA
- Pebble-bed nuclear reactor - https://en.wikipedia.org/wiki/Pebble_be ... ar_reactor

Now you may immediately jump in and say there's "market forces and politics" involved in products like Rooivalk and Ahrlac but then I would point you to the Israelis who, as a small country, seem to have no problem in this area. Fact is we suck at marketing and biz dev and it's a cultural hangover from the isolation years in my view. Isolation bred the ingenuity and self-reliance amongst our engineers, but with no opportunity to market outside SA and a captive market internally, we never developed those skills as a nation.
Last edited by pwnel on Sun Mar 03, 2019 9:38 pm, edited 1 time in total.
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Re: Ahrlac

Unread post by B.hawker » Sun Mar 03, 2019 9:38 pm

What a crazy story........the only winners through business rescue is the practitioner and the attorney's........if the project does have commercial value (we'll know soon enough - a sure indicator will be how quickly a buyer pops out of the woodwork) if not, this then becomes a really sad story of wasted money, blood, sweat and tears......
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Re: Ahrlac

Unread post by GL » Mon Mar 04, 2019 9:03 pm

Business rescue for Ahrlac?
Written by Jonathan Katzenellenbogen/defenceWeb - 4th Mar 2019334


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), which is developing the Ahrlac aircraft.

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.

“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; the Board has reached 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 Potgieters, the Ahrlac factory has been shut down and around 140 employees sent home. They did not receive January or February salaries, according to Rapport. 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 Rapport, the conflict between the Potgieters 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 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 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. A Paramount lawyer has denied this, according to Rapport.

Coetzer has also alleged that 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.”

Paramount, one of SA’s largest defence companies, is owned by the Ichikowitz family and has a large presence in a number of technology areas and markets. It has supplied a number of countries with its Mbombe infantry fighting vehicles, amongst others, and last month signed a deal to sell a new version, the Mbombe 4, to the United Arab Emirates.

As it is privately owned, little is known about Paramount’s revenue breakdown.

The Advanced, High Performance, Reconnaissance Light Aircraft (Ahrlac) is a push 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.
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Re: Ahrlac

Unread post by pwnel » Mon Mar 04, 2019 9:56 pm

GL wrote:
Mon Mar 04, 2019 9:03 pm
Business rescue for Ahrlac?
Written by Jonathan Katzenellenbogen/defenceWeb - 4th Mar 2019334

Paramount Aerospace Holdings and the Potgieter family each have 50 percent stakes in the Aerospace Development Corporation (formerly Ahrlac Holdings).
There's your first naive mistake right there. No-one has a majority stake. In entrepreneurship you can be Rich (attract investors at big valuation) or King (maintain control) - but rarely both.
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Re: Ahrlac

Unread post by Jack Welles » Tue Mar 05, 2019 7:47 am

Wouldn't be surprised to find that the Bronco II project in the USA hasn't got something to do with this.
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Re: Ahrlac

Unread post by micmaq » Tue Mar 05, 2019 1:25 pm

With such a breakdown of trust between the shareholders the project is doomed

It had just reached Stage 1 of the production cycle with two proof-of-concept pre-production prototypes flying - Nothing much for a successor to pick up from a liquidator without committing vast amounts of capital to get the project up and running again

A bit like the CSIR Ovid of the 90s - The SAAF chose the Pilatus PC-7 Astra over the still in development Ovid and when the prototype ZU-AHE was extensivly damaged in a belly landing that was the end
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Re: Ahrlac

Unread post by richard C » Tue Mar 05, 2019 1:47 pm

micmaq wrote:
Tue Mar 05, 2019 1:25 pm
With such a breakdown of trust between the shareholders the project is doomed

It had just reached Stage 1 of the production cycle with two proof-of-concept pre-production prototypes flying - Nothing much for a successor to pick up from a liquidator without committing vast amounts of capital to get the project up and running again

A bit like the CSIR Ovid of the 90s - The SAAF chose the Pilatus PC-7 Astra over the still in development Ovid and when the prototype ZU-AHE was extensivly damaged in a belly landing that was the end
Very sad.

You can't help but feel that if demand and sales were good there wouldn't have been a breakdown amongst the investors. I thought they had the whole deal sown up, perhaps one of the big purchasors pulled out. Or maybe Boeing decided to bury it. I think it has happened to South African designed and built airforce hardware before.
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Re: Ahrlac

Unread post by Falafel » Tue Mar 05, 2019 1:53 pm

richard C wrote:
Tue Mar 05, 2019 1:47 pm
micmaq wrote:
Tue Mar 05, 2019 1:25 pm
With such a breakdown of trust between the shareholders the project is doomed

It had just reached Stage 1 of the production cycle with two proof-of-concept pre-production prototypes flying - Nothing much for a successor to pick up from a liquidator without committing vast amounts of capital to get the project up and running again

A bit like the CSIR Ovid of the 90s - The SAAF chose the Pilatus PC-7 Astra over the still in development Ovid and when the prototype ZU-AHE was extensivly damaged in a belly landing that was the end
Very sad.

You can't help but feel that if demand and sales were good there wouldn't have been a breakdown amongst the investors. I thought they had the whole deal sown up, perhaps one of the big purchasors pulled out. Or maybe Boeing decided to bury it. I think it has happened to South African designed and built airforce hardware before.
Its almost nice and convenient to think this but honestly...

1. I doubt whether Boeing "buried" it was a reason... and even if they did surely developers knew the risks before hand?
2. Surely it doesnt make sense to develop an aircraft with a speculative "big" order and if they did what was the life span or relevance anyway?

Possibly tension started when there was a realisation there just wasnt the demand... there were many comments about the relevance of this aircraft in the market... my guess would be the closer they got to the production the more they started to wonder if they would get money back and in fighting began... who put in what and how much each was "owed"...
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Re: Ahrlac

Unread post by Darren » Tue Mar 05, 2019 2:08 pm

This is certainly a very unpleasant outcome, but I have some hope that the project can be saved. The key question is how the customers react.

My understanding from Erika's article is that Paramount and ADC reached a point where their interests and approach for the production phase, which had perhaps either not been shared or not fully understood during development, differed too much for the partnership to be able to progress any further. Once that happened the partnership probably could not be saved.

Both Paramount and ADC have spoken to the media before about confirmed and paid orders, so I don't think this is a market demand failure. Nor do I think Boeing 'buried' the project. Moreover there wouldn't be this much fighting to obtain the underlying assets and potential to resume the project if either party didn't believe in being able to make a success of it. You'd instead hear both sides speaking of urgent liquidation.

Some of the key legal issues to be resolved now under business rescue appear to be this (again, according to the articles by Erika and DefenceWeb):

1) Whether Paramount was in breach of its shareholder responsibilities to ADC ahead of the breakdown in talks. This would probably centre around the Memorandum of Incorporation's terms and the terms of any shareholder loans or other agreements.
2) Whether, as alleged, Paramount (potentially illegally) misappropriated intellectual property belonging to ADC.
3) Whether ADC's management acted properly and in good faith throughout and properly interacted with the board.

As things stand, the ADC board has four members, two from Paramount (Ivor Ichikowitz and Rob Kihn) and two from the Potgieter family (Paul Snr & Paul Jnr). Things have likely reached a head now because March is the company's financial year end.
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Re: Ahrlac

Unread post by Falafel » Tue Mar 05, 2019 2:14 pm

Darren wrote:
Tue Mar 05, 2019 2:08 pm
This is certainly a very unpleasant outcome, but I have some hope that the project can be saved. The key question is how the customers react.

My understanding from Erika's article is that Paramount and ADC reached a point where their interests and approach for the production phase, which had perhaps either not been shared or not fully understood during development, differed too much for the partnership to be able to progress any further. Once that happened the partnership probably could not be saved.

Both Paramount and ADC have spoken to the media before about confirmed and paid orders, so I don't think this is a market demand failure. Nor do I think Boeing 'buried' the project. Moreover there wouldn't be this much fighting to obtain the underlying assets and potential to resume the project if either party didn't believe in being able to make a success of it. You'd instead hear both sides speaking of urgent liquidation.

Some of the key legal issues to be resolved now under business rescue appear to be this (again, according to the articles by Erika and DefenceWeb):

1) Whether Paramount was in breach of its shareholder responsibilities to ADC ahead of the breakdown in talks. This would probably centre around the Memorandum of Incorporation's terms and the terms of any shareholder loans or other agreements.
2) Whether, as alleged, Paramount (potentially illegally) misappropriated intellectual property belonging to ADC.
3) Whether ADC's management acted properly and in good faith throughout and properly interacted with the board.

As things stand, the ADC board has four members, two from Paramount (Ivor Ichikowitz and Rob Kihn) and two from the Potgieter family (Paul Snr & Paul Jnr). Things have likely reached a head now because March is the company's financial year end.
I couldnt imagine them binning the project if there was potentially a really good outcome though with paid orders and a nice looking order book?
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Re: Ahrlac

Unread post by Darren » Tue Mar 05, 2019 2:41 pm

Falafel wrote:
Tue Mar 05, 2019 2:14 pm
I couldnt imagine them binning the project if there was potentially a really good outcome though with paid orders and a nice looking order book?
To me the key bits of the Beeld & DefenceWeb reports are the claims of money being owed, but not paid, and intellectual property being wrongly misappropriated. I can see how even a successful project might be derailed over something like that.

I'm not saying it's all roses, of course. This is a devastating blow for the project and it will cause long-term damage even if AHRLAC comes out of the business rescue process intact.
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Re: Ahrlac

Unread post by micmaq » Sun Mar 10, 2019 2:45 pm

Does anybody know what was the outcome of the court action ?

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