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LMI completes purchase of Valent Aerostructures

  • The Wichita Eagle
  • Published Monday, Dec. 31, 2012, at 10:24 a.m.
  • Updated Monday, Dec. 31, 2012, at 11:19 p.m.

LMI Aerospace has completed the purchase of Kansas City, Mo.-based Valent Aerostructures, which has manufacturing operations in southeast Wichita.

Valent’s business provides complex, structural components, major subassemblies and machined parts for the aerospace and defense industries.

The purchase made sense for LMI, said the company’s chief financial officer Ed Dickinson.

LMI, based in St. Louis, does sheet metal components, while Valent forms machined parts from blocks of metal.

“It’s a narrow distinction to most people,” Dickinson said. “But we’re trying to put together a higher level of assemblies. Most of our sheet metal parts mate with machined parts. And that’s what Valent brings.”

For Valent to be competitive and win more assembly work, it needed sheet metal capability, he said.

“Both of us were trying to pursue higher-level assemblies,” Dickinson said.

The deal closed Friday.

LMI and Valent each operate facilities in Wichita and together employ about 150 locally.

“I don’t think we have any plans to change what’s being done in our Wichita location,” Dickinson said.

However, if there are cost savings by consolidating facilities in Wichita, the company would consider it.

“But it’s early for that,” Dickinson said.

Each also operates plants in Tulsa and St. Louis.

“We’re going to have to stand back and look at all of that given our current view of growth that both of us are facing,” he said. “Our industry has a pretty good backlog and a lot of work.”

That’s largely driven by Boeing’s production increases in its commercial airliners and by work for Gulfstream.

In the deal, LMI bought Valent’s outstanding equity for $237 million plus $9.7 million in certain retained obligations, subject to adjustments for working capital and transaction expenses, according to a news release from LMI.

As part of the purchase price, LMI issued to Valent equity holders a total of 784,000 shares of common LMI stock, valued at $15 million.

The agreement also includes potential earnings of up to $40 million if Valent exceeds certain financial thresholds in 2013.

In connection with the purchase, LMI completed debt refinancing and entered into $300 million of new senior secured credit facilities, including a $225 million term loan and $75 million in revolving credit.

The company planned to use the financing for the Valent acquisition, refinance existing debt and for general corporate purposes, including for working capital, it said.

Valent’s facilities provides parts for the Boeing 737, 747-8, 777, 787 and the Osprey V-22, Bombardier CSeries aircraft and the Gulfstream G650 business jet.

Valent co-CEOs – brothers Charlie Newell and Henry Newell – will stay on and serve as co-presidents of LMI’s aerostructures group.

Valent started in 1996 when the two Newell brothers began buying manufacturing companies. They later brought in Bruce Breckenridge, executive vice president of business development, and in 2009, they formally consolidated as Valent Aerostructures.

And a group of outside companies helped provide the financial backing to support customers, Charlie Newell said in an interview in 2011.

Breckenridge also will stay on with LMI, Dickinson said.

Besides Wichita, Valent had operations in Fredonia and Tulsa, and, in Missouri, in St. Louis, Dutzow, Cuba and Washington. It has assembly facilities in Cottonwood Falls and Lenexa, employing about 650 people in all.

Consolidation of the Dutzow location into the Washington facility will conclude in the next week or two, Dickinson said.

Contact Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com.

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