A Wall Street investment firm has purchased a controlling interest in a Mesa-based helicopter company and hopes to elevate its business prospects.
Patriarch Partners LLC, a New York and Charlotte, N.C., firm with more than $4.5 billion in assets, has bought a majority stake in MD Helicopters from RDM Holdings N.V. of the Netherlands, and has installed an interim chief executive to start revitalizing the company.
"We want to rise to the level of being a hot growth company in the Valley," said Robert Rene, chairman and interim chief executive officer.
MD Helicopters, the former commercial operations of the McDonnell Douglas Helicopter Co., makes the twin-engine MD Explorer and the single-engine 600N, 520N and 500E helicopters, which are used by air evac services and law enforcement agencies worldwide. The company may be best known for the NOTAR no-tail-rotor system on its helicopters.
After Boeing acquired McDonnell Douglas in 1999, Boeing sold the commercial rotorcraft business to RDM Holdings so it could concentrate on the military Apache helicopter program. RDM decided to keep the MD name for the company, located at 4555 E. McDowell Road, even though it was no longer associated with McDonnell Douglas.
MD Helicopters ran into turbulence last year when when technical problems delayed the delivery of 13 helicopters to customers in Germany and the Netherlands. That caused cash flow problems, which required the company to look for new sources of financing.
Patriarch Partners decided to invest in the company because it has a strong product line with pent-up market demand, said Rene.
"We have made a commitment to reinvigorate a great American company over the long term," he said. "This is a huge opportunity for us."
He declined to say how much Patriarch will inject into the business, but Rene said "it is significant enough to allow the company . . . to grow over five years." After five years, the company hopefully will become large enough to afford acquisitions that would further expand its business, he said.
One of Rene’s first tasks is to set up a management team, including a permanent CEO and several other high executive positions. Rene said he will remain as chairman.
Another immediate challenge is to compete for a $3 billion U.S. Army order for a new light utility helicopter to replace Vietnam-era Huey choppers. MD is joining with Lockheed Martin to offer a slightly modified version of the Explorer. Bell Helicopter, Eurocopter and other contractors also are vying for the job, and a decision by the Army is expected in April.
If MD wins the competition, the army is expected to order 355 Explorers over five or six years for troop transport, medical evacuation and other light military duties. MD would have to add about 200 employees to build the machines, more than doubling its current staff of 185, said MD spokesman Ken Jensen.
Even if the Army chooses another contractor, Rene said MD still has the potential to grow its civilian business in medical and police markets.
"There is enough demand on the commercial side that the LUH (light utility helicopter) is the icing on the cake," he said.