Spirit AeroSystems Sells Fiber Materials Inc. for $165M

Beleaguered Spirit AeroSystems, which is in financial difficulty prior to the completion of its acquisition by Boeing and spin-off of a portion to Airbus, is selling its Fiber Materials unit. The transaction with Tex-Tech Industries is an all cash deal for $165 million. Unique High Temperature Applications Fiber materials manufacturers carbon and ceramic composite materials used primarily in defense and space applications. Products include thermal protection system, re-entry vehicle nose tips, and parts for rocket motors and nozzles. Materials produced by Fiber Materials are used on critical defense platforms and NASA programs Stardust, Mars Curiosity, Mars 2020 and Orion. “Tex-Tech is excited to add MFI’s unique array of high-performance products to our existing portfolio of offerings for the rapidly growing space and defense industry,” said Scott Burkhart, Tex-Tech CEO. “Our customers demand world-class solutions, and the integration of FMI bolsters our ability to meet those demands.” Financial Difficulties Spirit AeroSystems was recently bailed out by Boeing with interim financing and remains concerned about its ability to sustain itself as a going concern. The company was heavily impacted by the Boeing strike, but has now recalled its employees furloughed during the strike to restart 737 fuselage production. The all cash transaction will provide Spirit additional liquidity as it transitions to Boeing early next year. Spirit purchased FMI for $120 million in 2020. Last week, Boeing agreed to pay spirit $350 million in advance, with Airbus providing a non-interest bearing line of credit for $107 million, also to be used as advance payments. The Bottom Line The additional liquidity from the sale should ease concerns regarding the ability of the company to remain a going concern in the near term, and should bridge to the Boeing acquisition agreed to in July for an all-stock transaction of $4.7 billion. The sale of key materials used in space may provide a clue with respect to Boeing's future strategy, which CEO Kelly Ortberg indicated was to build airplanes. It is likely that high-temperature products are used in Boeing's space programs, which now will not be a part of Boeing's acquisition portfolio.

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