Commander Premier deal closer to completion

Friday, September 11, 2009
The control tower and terminal building at Cape Girardeau Regional Airport in Cape Girardeau, Mo., is seen in this photo taken, Wednesday, March 25, 2009. (AP Photo/Jeff Roberson)

By incremental steps, the deal that would bring Commander Premier Aircraft Corp. into new ownership and relieve Cape Girardeau of a major debt headache is moving ahead.

Canadian financier Ronald Strauss announced in July plans to buy Commander Premier and the building at Cape Girardeau Regional Airport that houses the company. At that time, he said he expected to finish paying off creditors of the aircraft company by mid-August. Mayor Jay Knudtson, relying on that timeline, said he hoped to complete the deal for the building by the end of August.

While those dates are past, Strauss has signed a memorandum of understanding with the city that obligates him to complete his purchase of the 52,000-square-foot building within 30 days of paying off the stockholders of Commander Premier. The financial details have not been released.

Strauss has said he wants to buy Commander and some other airplane companies and form a new corporation called Aero-Base Inc.

The city provided a few details of the arrangement -- the memorandum includes consideration for back rent and incentive clauses for Aero-Base for achieving set numbers of jobs. Thorough mechanical inspections and appraisals have been completed.

Strauss said Thursday he's confident the deal will go through. The financial arrangements are just taking a little longer than he intended.

"There is no absolute deadline," Strauss said. "It is just a question of getting the work done as quickly as possible."

The current owners of Commander Premier brought the business to Cape Girardeau after buying the remaining stock of parts and the name from the originators of the aircraft in 2005. To lure the company, which promised to begin building new aircraft in Cape Girardeau, the city offered use of the manufacturing building rent-free for six months. After that, an escalating rent payment became due each month that, beginning in January, is supposed to cover the city's debt obligations. No rent payments have been made since December 2007.

The building was originally built with city-backed financing for a company called Renaissance Air. City leaders have said they have been lenient with Commander Premier because limitations on the use of the building were built into the bond issue used to finance it. Until the bonds are paid off -- the earliest possible date is 2013 -- the only allowable use is as an airplane manufacturing facility.

City manager Scott Meyer said he's willing to wait a little longer to give Strauss time to complete his deal. Meyer said he speaks with Strauss regularly to receive updates.

"There have been challenges to get all the money in the right place to take care of each of the different steps," Meyer said. "He has the debtors to deal with, he has the stockholders to deal with and after them comes our part of it, which is the lease and the sale of the building."

The city owes $2.2 million on the $2.8 million bond issue. The next payment, about $65,000, is due in October. Another payment of just under $200,000 is due in April. Those payments, like most previous payments, will come from the city's general revenue fund if the deal does not go through.

Despite a tight budget, the city has already allocated money for those payments. If the building is sold, that money will be available for other uses.

"We want it to close as soon as possible," Meyer said. "It is a strainer on our budget, and it is our intent not to have it linger."

The key creditor to be satisfied is Aerodyne Corp., one of Commander's original stockholders. Aerodyne holds a lien against the equipment and parts that must be discharged as part of any deal.

Negotiations are still underway with creditors, which is the first step to closing a deal, Strauss said.

"At this point we don't have any reason to believe we won't be able to close this deal when the work is completed," he said.

rkeller@semissourian.com

388-3642

Pertinent address:

Cape Girardeau Regional Airport, Cape Girardeau, Mo.

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