Standard Aero obtains waiver for credit facilities after failing to file 10-K on time

By Angela McDaniels

Seattle, April 12 - Standard Aero Holdings Inc. said it was unable to deliver its 10-K report for the year ended Dec. 31 and related documentation on time, which resulted in a default under its senior credit facilities.

The lenders provided a waiver through April 17, which allows the company to make additional borrowings under the revolving portion of the senior credit facilities.

Standard Aero said it plans to file the report by April 17, but if it is unable to do so, the waiver will expire and the company will again be in default. The company could provide no assurance that the lenders would waive any future default.

The filing delay is related to the determination of the board of directors' audit committee that the company's financial statements for 2005 and the second half of 2004 must be restated to correct the accounting for a loss contract at the time of the company's acquisition of the MRO business of Dunlop Standard Aerospace Group Ltd. in August 2004, subsequent losses under the contract and an error that occurred during the fourth quarter of 2004 that resulted in a miscalculation and overstatement of reported accounts receivable.

The company concluded that the errors were a result of material weaknesses in its internal control over financial reporting.

Standard Aero said the effect of the restatement will be to decrease the company's cost of revenues for each of the applicable periods and increase its reported income from operations, income before income taxes and net income; it will not impact the company's cash balances.

Standard Aero is a Winnipeg, Manitoba-based provider of maintenance, repair and overhaul services for aircraft engines and industrial gas turbines.

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