CD&R;, Allianz to Buy Fairchild Aerospace

Clayton Dubilier & Rice Inc., a New York investment company, and German insurer Allianz agreed Tuesday to buy Fairchild Aerospace Corp. for $400 million in cash, assume $350 million in debt and arrange credit lines of about $440 million to help fund Fairchild’s new line of regional jets.

Closely held Fairchild, based in Germany and San Antonio, had been looking for investors to help finance a new series of aircraft it needs to compete against its main rivals, Canada’s Bombardier Inc. and Brazil’s Embraer. Regional airlines have increasingly turned to jets to replace propeller-driven planes, driving sales.

“We see 1/8Fairchild’s sales 3/8 growing from roughly half-a-billion dollars in volume this year to more than $5 billion in 2008,” CD&R; Chairman Joseph Rice said.

Under the deal, CD&R; will provide $300 million, Allianz will provide $100 million, and a group of German banks will lend $350 million to cover the assumed debt. The banks and others will offer as much as $440 million in credit for aircraft development. The majority of CD&R;’s and Allianz’s investment is earmarked to fund jet development.

CD&R; will own as much as 75% of Fairchild and Allianz Capital Partners will own the balance when the sale is completed, which is expected in the first quarter.