Citigroup is leading the debt financing backing Onex Corp.'s $1.5 billion acquisition of the Wichita/Tulsa Division of Boeing Commercial Airplanes. Nigel Wright, managing director at Onex, said the acquisition would be conventional bank debt with the cash portion of the deal comprising $1.1 billion.
In addition to the cash, there will be a transfer of certain liabilities and long-term supply agreements. The equity component is $465 million. Citigroup advised Onex on the transaction.
The new business will enter into long-term agreements with Boeing to supply it with fuselage sections, struts and wing parts, including the new 787, making it the largest Tier 1 aerostructures manufacturer globally. In addition, Wright said the conversion into an external supplier from purely an internal operation will open up opportunities for the business.
Wright said Onex has been working on the transaction since May 2004. "It's a good point in the demand cycle," he said, noting that '04 was better than '03 but not significantly. Meanwhile, this year is already very strong. "It's a long-production cycle business and the 2005 order book is already full," Wright noted. Citi bankers did not return calls.
