Does selling at a discount make sense?
CORRECTED - Israel's RADA sees big boost from Boeing link
In a story datelined Jerusalem and headlined ''Israel's RADA sees big
boost from Boeing link,'' please read sixth paragraph as ''He said that
was the reason RADA was prepared to sell control of the company at a
discount to its market capitalization'' instead of ''at close to its
market capitalization.''
Also, in the seventh graph, please read end of sentence referring to
RADA's market capitalization as ''$45.0 million,'' instead of ''$25.1
million.''
And in the last graph, referring to RADA's net loss for the first nine
months of 1997, please read ''a $6.3 million net loss'' instead of ''a
$6.8 million net loss.''
A corrected version of the story follows.
JERUSALEM, March 18 (Reuters) - Israel's RADA Electronic Industries Ltd.
(RADIF - news) will get an important marketing boost from Boeing Co.'s (
BA - news) decision to take a controlling stake in the company, RADA
Managing Director Haim Nissenson said on Wednesday.
''We were RADA from Beit Shean yesterday and tomorrow we're a part of
Boeing,'' Nissenson told Reuters. ''We'll be able to capitalize on the
market under the new ownership.''
Earlier Wednesday, the two companies announced that Boeing Enterprises,
the U.S.-based aircraft maker's business-development arm, had signed a
preliminary agreement to buy a 42 percent stake in RADA for about $10
million.
RADA makes an aircraft avionics test system called CATS (Commercial
Avionics Test Station) and more recently has begun operating test
centers at major airports.
Nissenson said the deal would almost certainly strengthen the existing
technical cooperation between the two companies, but he said any
concrete marketing assistance, in sales or service, was ''something for
the future.''
He said the main boost RADA obtained came from the Boeing affiliation.
He said that was the reason RADA was prepared to sell control of the
company at a discount to its market capitalization.
RADA, whose stock was down 3/16 to 3 in Nasdaq trading on Wednesday, has
a market capitalization of $45.0 million.
Boeing will be issued 10 million new shares. Boeing's stock also fell
3/4 to 51-1/4 Wednesday afternoon in trading on the New York Stock
Exchange.
''The nature of the company (Boeing) is that they won't have any new
competition in the next 20-30 years. That's why we're so happy,''
Nissenson said. ''From a financial investor, you could have gotten more
(money), but in our field, Boeing is the best you can get as a
partner.''
The Boeing deal comes as RADA embarks on a new strategic direction,
operating CATS testing centers at major world airports rather than
solely selling the equipment.
Until now, Nissenson said, suspected malfunctions in computer avionics
required the systems to be removed from the aircraft and taken to a
distant maintenance center. Testing and maintenance could take weeks,
even though only about half the suspected malfunctions prove to be real.
Sited at airports, the new centers will enable tests to be conducted on
the spot. Only units with actual problems would then be sent to a
maintenance center.
A trial center has been set up at Miami's airport and won U.S. Federal
Aviation Administration (FAA) approval last month, Nissenson said. He
said the new business ''looks very profitable.''
Last November, RADA reported a $6.3 million net loss for the first nine
months of 1997, which Nissenson said was due mainly to write-offs. He
estimated full-year 1997 revenues would reach $20 million. For the first
nine months of 1997, RADA's revenues totaled $14.1 million. |
