Philadelphia-based Versa Capital Management Inc. and Melville, N.Y.-based Park Electrochemical Corp. each filed a motion with the U.S.
Bankruptcy Court in Portland on Wednesday complaining that Columbia's proposed bidding process chills competitive bidders, like themselves.
Park's motion asks the court to modify the bidding procedures, and Versa's motion requests that the court completely deny them.
Columbia hopes to complete a sale by the end of November or December, because the company is "experiencing operating losses in the magnitude of roughly $1 million per week," according to e-mails between Columbia and a Park Electrochemical attorney, included in Park's motion.
Cessna officials say their company, part of Providence, R.I.-based Textron Inc., which produces Bell helicopters and has industrial and finance divisions, has the financial backing to support Columbia, which reported $60 million in unsecured debt in its bankruptcy filing.
Columbia filed for Chapter 11 bankruptcy protection Sept. 24 and announced that it intended to sell the company to Wichita, Kan.-based Cessna. Cessna officials say the company will keep Columbia's operations in Bend, with no plans of moving operations to Kansas.
Columbia is one of Central Oregon's largest employers, with about 400 people.
Columbia attorneys have said the Chapter 11 filing was designed to facilitate sale of the company to Cessna. Columbia, however, will go up for auction Nov. 21 to allow other companies to make competing bids.
Versa and Park oppose Columbia's proposed procedures for that bidding process.
The players Park manufactures high-tech digital and advanced composite materials principally for telecommunications and Internet infrastructure, high-end computing and aerospace markets, with a focus on general aviation.
The company reported $258 million in net sales for its fiscal year that ended Feb. 25 and net earnings of $39.8 million. The company's interest in Columbia stems from Park's desire to expand its current composite manufacturing expertise into aircraft components and manufacturing, according to the bankruptcy motion documents.
Cessna cited similar reasons for acquiring Columbia's assets.
"Right now, [Columbia airplanes] are faster than anything we have to offer," Bob Stangarone, vice president of corporate communications at Cessna, said in a telephone interview Thursday. "It makes us more competitive, because we can offer a more complete product line."
Cessna doesn't make any composite aircraft to compete with its rival, Cirrus Design Corp., based in Duluth, Minn.
Cessna's 2006 revenues totaled $4.2 billion, and the company delivered more than 1,200 planes. Its revenues for the first half of 2007 were more than $2.1 billion. Its parent company, Textron Inc., has a total market capitalization of about $15 billion.
Representatives of Versa Capital Management could not be reached for comment, but the investment company said it "may make an offer to purchase assets of Columbia," according to Wednesday's Bankruptcy Court filing.
Representatives of Columbia did not return calls for comment Thursday.
Park President and CEO Brian Shore declined to comment Thursday.
Before the bidding war Versa and Park cited a number of problems with Columbia's proposed bidding procedures, which Columbia's attorneys submitted to the court Sept. 28, pending a hearing for approval.
"The playing field is not level," Versa's filing said. "It is tilted in favor of Cessna."
Objections include:
--Cessna's bid for Columbia is not held to the same qualifications as competitors.
--Cessna's letter of intent puts the company under no contractual obligation to purchase Columbia. "It can merely walk away and receive back any deposit -- no questions asked," according to Versa's filing.
--Columbia wants Cessna to be the initial bidder and have a right to $500,000 as a "breakup fee" if Cessna doesn't end up winning the bid for Columbia. This "would provide Cessna with substantial tactical advantage over the other competing bidders," according to Versa's filing. "Here, however, Cessna has done nothing to entitle it to either benefit."
--Cessna's letter of intent, while offering $14 million in cash and the assumption of roughly $7 million in Columbia debt, does not define a slew of other price components, according to Versa, and Cessna is not required to announce its opening bid amount until other competing bids are submitted. A bidding process where the opening bid is not fully disclosed before competitors must submit an overbid "is fundamentally flawed, illogical and unfairly favors Cessna over competing bidders," Versa's filing says.
--Columbia is not providing to other interested parties the same access to its business information as it is to Cessna.
--Timelines in the bidding procedure limit potential bidders from having enough time to properly prepare for a bid.
--The bidding process, in which Columbia requests only 10 minutes between rounds, is too limiting.
--A minimum overbid amount of $1 million is artificially large to accommodate for breakup fees, according to Versa, and chills competitive bidding.
Cessna spokesman Stangarone said Cessna does not control the Bankruptcy Court's bidding process and could not comment on the filings by Versa and Park because he had not seen them.
"The Bankruptcy Court's function is to look out for the interests of creditors," Stangarone said. "So I don't know how that would benefit Cessna."
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