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Gold/Mining/Energy : Derlan (T.DRL) -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (224)	5/28/1999 4:01:00 PM
From: Stephen O	Read Replies (2) \| Respond to of 319

DJN =DJ Derlan Still Considering Sale Despite Boeing Pact>T.DRL Symbol: C/DRL Industry: IDD Subject: DJN DJWI DJS MMM TNM CAC ETDR HIY HYL MNA STK Market Sector: IDU Geographic Region: CN NME ONT Product/Service: DCA By Lori McLeod TORONTO (Dow Jones)--A contract from Boeing Co. (BA), valued at more than C$500 million, doesn't change Derlan Industries Ltd.'s (T.DRL) plan to maximize shareholder value through measures which could include selling the company, David Williamson, Derlan Industries' president and chief operating officer, told Dow Jones. Thursday, Derlan Industries said its Derlan Aerospace division had signed a definitive agreement with Boeing to develop a new generation of drive-train systems. The contract should add about C$50 million a year to Derlan's revenues for [Back] [Print] 1678 DJ 28-May-99 at 14:01:00 15:54 Page 2 10 years, starting in about 2003, Williamson said. Revenues from Derlan Industries' aerospace group, including Derlan Aerospace, totalled about C$110 million in 1998, Williamson added. As reported, Derlan Industries hired B.T. Wolfensohn and B.T. Alex Brown in December as advisers to help it maximize shareholder value. These advisers are still evaluating Derlan Industries' options, and are "unfettered" in what they can consider, Williamson said. Options could include a full or partial sale of Derlan Industries or some other type of business combination, Williamson said. The contract with Boeing is positive no matter what Derlan Industries chooses to do; either making it more attractive to potential buyers or confirming Derlan Aerospace's long-term growth prospects for shareholders, he said. After Derlan Industries announced the contract Thursday, its stock rose 0.75, or 38.5%, to close at 2.70. Friday the stock has lost some ground, and is down trading at 2.30, off 0.40. Williamson said he didn't think that the decline in the share price Friday reflects investors realizing that Derlan Industries won't see revenues from the contract for about four years. He said it's hard to predict how the market will react to company news, and that he's waiting to see where Derlan Industries' share price settles. Derlan Industries Ltd.'s (T.DRL) pact with Boeing Co. (BA) is for the development of a new generation of drive-train systems for the AH-64 Apache Attack Helicopter, according to a company news release. As part of the agreement, Derlan Industries was also granted a 10-year exclusive manufacturing license, according to the release. Boeing spokesman Ken Jensen said the new drive train will have face gears rather than edge gears. It will have fewer moving parts than a traditional drive train system, and will be lighter and less expensive to produce, Jensen said. Development of the system will take "a few years," Jensen said. The project is a joint venture, with both companies contributing financial and other resources to develop the system, said David Williamson, Derlan Industries' president and chief operating officer. Derlan Industries has sufficient funds to cover its portion of the development costs, mainly using cash it has on hand from continuing non-core asset sales, Williamson said. Derlan Industries started the sale process last November, and has sold six non-core businesses for proceeds of about C$80 million, Williamson said. Derlan has four more non-core businesses it would like to sell, he added. In a telephone interview Thursday, Greg McLeish, analyst with Octagon Capital Corp., said Derlan Industries' non-core asset sales have been a "prudent" move. The sales make it more likely that Derlan Industries' core businesses could be sold as a whole rather than in pieces, he added. McLeish declined to speculate about which companies might be interested in Derlan Industries' assets, but noted increasing consolidation in the U.S. aerospace industry could lead U.S. companies to look for acquisitions north of the border. McLeish said he has a "speculative buy" recommendation on Derlan Industries, noting there's lots of risk in the stock but that it also has a "substantial upside." -Lori McLeod; 416-306-2031; lori.mcleod@dowjones.ca (END) DOW JONES NEWS 05-28-99 02:58 PM End of News