U.S. Firm Says It Sought Stake in McDonnell
McDonnell Douglas--which has said it sought Asian investors for its commercial aircraft business only after it failed to attract American funds--was approached by a U.S. venture capital firm early last year proposing to buy into the firm, according to congressional testimony Wednesday.
Aaron Hollander, managing partner of First Equity Development Corp. of Stamford, Conn., testified that he presented a U.S. investment plan to a senior McDonnell Douglas financial executive 10 months before Taiwan Aerospace Corp. emerged as a prospective investor in the St. Louis-based firm.
McDonnell signed a preliminary agreement in November to sell a 40% stake in its commercial aircraft business in Long Beach to Taiwan Aerospace for $2 billion. The sale prompted 30 U.S. senators to send a letter to President Bush asking whether a U.S. investor could be found.
Members of a House subcommittee on government operations did not ask Hollander to identify the investors backing his proposal, and he declined to speculate why McDonnell turned him down.
But in response to questions, he said: “I think it is fair to say we did enough research that we were confident that we can raise the $2 billion in the U.S. market.”
McDonnell officials declined to testify, and a company spokesman declined to comment.
Hollander said his firm, founded seven years ago, is a financial adviser to the aerospace industry. It has represented companies around the world, he said, and was involved in such aerospace deals as the Canadian conglomerate Bombardier’s acquisitions of Canadair Ltd. and Learjet Corp.
Hollander’s disclosure angered committee members and officials of McDonnell unions.
McDonnell “is not interested in American workers or an American solution,” said Rep. Barbara Boxer (D-Greenbrae), the subcommittee chair. “The irony is that they have gotten $70 billion from taxpayers for their military work.”
Boxer, who is running for the U.S. Senate, has played a leading role in Congress in critiquing the Taiwan Aerospace deal. In recent days, questions have been raised in the United States and Taiwan about whether Taiwan Aerospace will purchase the full 40% stake it was expected to take in McDonnell’s commercial operations.
The testimony suggested that McDonnell--uncertain of its ability to market new aircraft in Asia-- was intent on finding foreign investors from the start, said Bill Gurzi, a spokesman for United Auto Workers Local 148, which represents Douglas Aircraft employees in Long Beach.
He also said the disclosure would undermine assurances that the company has made to workers in Long Beach about the security of their jobs.
