Cirrus Design - owned by Saudi Shieks

While in pursuit of deciding which plane to purchase, a collegue of mine stated that Cirrus Design was essentially bought-out by Crescent Investments in 2001. His story is that the company had serious cash flow issues, so Klapmier sold over 87% of his business rights to Crescent Investments - which is owned by…the Bank of Bahrain. A small group of Arab Shieks supposedly OWNES Cirrus!!

I was under the impression that Cirrus Design was a solid US company owned by a couple of Wisconsin brothers…I have an issue with buying an aircraft that will support Middle-Eastern investors, who quite frankly don’t like Americans…but will gladly benefit from our hard earned money. They must be laughing all the way to the bank.

Is my friend correct??

I remmeber this well. But I do not know how much they bought. But they save the day for me. I had about $50,000.00 deposit on my SR20 and it was not looking good. Even thou it did get delayed to build the 22. I still did get it. With several improvements. Also there money helped Cirrus move forward with there new products. Don

Bill,

Yes, to some degree it is true, not to the strength of your friends comments. Background, when Cirrus was trying to raise the money to capitalize production expansion, they could not find any US based investors. In fact they could not find any investors other than a handful of supportive folks and some position holder that invested some money in them. A number of folks on COPA are shareholders, I am one of them.

At that point in time Cirrus was turning out a few airplanes per month and it looked like they could never become viable. So it literally saved them - they would either be bankrupt or a money losing niche player raising prices producing a few planes per month and losing potential sales due to economics (like the Mooney and Beech model and we all know where that went) if they had not gotten this investment. And to think they are laughing all the way to the bank is somewhat a misnomer, they have not made any money on the deal and as investments go it has to be a marginal one - so it might be better thought of as a underwriting of US production that no one in the US would do. But haven’t they all been since 9/11?

Do not think this is a Cirrus problem, the money to fund Lancairs expansion did not come and they languished producing a few planes until the Malaysian investors came through with like $25M. The is strong Muslim sentiment there as well.

At the end of the day Cirrus is a corporation and they did what they had to. The alternative was worse and frankly the Bahrainians (btw a bank, not Shieks - although one could surmise some rich guys hold most of the money) have been patient capital (all one could expect) and frankly they are not extremists. They are businessmen. Its the small extremist groups we need to worry about, not the businessmen. To write off a whole population of people because of a few…well you can fill in the rest. If that happened global trade would vanish and our world as we know it would not exist. And I suspect this discussion would be academic as no one could afford a plane.

My .02 for what its worth. Everyone is entitled to their opinion, but I obviously think this should not be a factor when you make a choice…

All true. This came up while I awaited delivery of my SR22 and I did think about it for a few minutes. However, you need to recognize that is fungible and corporate ownerships are very broad. Would you not deal with Citigroup, Smith Barney, Travelers, etc. because there are some Saudi shareholders there - were it not for the Saudis there might not be a Citigroup today. I think you need to look at the product not, in this case, the source of capital. And the product is verrrry good. Just my .02.

Your subject line is incorrect, and you should change it. Bahrain is not Saudi Arabia – and to put this as pleasantly as I can, the conflation of ‘Bahraini investors’ with ‘Saudi sheiks’ suggests a more basic lack of knowledge of what we’re talking about here.
Saudi Arabia is a big problem for the United States, in ways we all can discuss in other fora. Bahrain has historically not been a similar problem. It is also a sheikdom, and it also runs on oil. But its political and religious outlook have been notably different from the Saudis.’ You can get more official US govt info on it here.
is a link to investments currently held by the Bahraini-funded Crescent capital, with is in turn owned by the First Islamic Bank in Bahrain. You’ll see how subversive some of these seem. (Caribou Coffee???) Here are http://www.crescentcapital.com/management.htm>the who make their investment decisions. Here is the set of “investment principles” – you might look at see which of these you would find fault with. Hint: they don’t include “death to the West!” There is an intriguing reference to “Islamic investment” rules, which you can find here.

Cirrus was in intense negotiations two-plus years ago, essentially about whether it could find the money (in this very dicey business) to stay alive. The best offer came from Crescent. (Lancair, as mentioned, had to sell what I believe to be a majority share directly to the Malaysian government to stay in business.) I’ve not seen anyone anywhere suggest there Cirrus has done anything since getting Crescent’s investment that is different in what it would have done with “pure” American money. The difference is the pure Americans would not put up the dough. So here’s your real world choice: what Cirrus has done in the last two years, with Crescent’s backing; or Cirrus limping along with no SR22, with a one- or two- plane per week production rate, and with the realistic prospect that it would be yet another failed attempt to get into the apparently-doomed GA market.

After you look over the actual info about Bahrain and about Crescent, do you come to any different conclusion from what you thought before? If you don’t – if the prospect of investment from a basically-westernized oil country, through a US subsidiary, in a way that kept Cirrus alive, is still repugnant to you, well then… we disagree, and it would be worth thinking about what exactly is the root of your objection.

Nuthin laak a good racist post to stir things up, ay bubbas?

Ah guess the message is “Buy 'Merkin, y’all”

Funny, that’s just what Lee Iococca was saying in the eighties, when he was doing his Chrysler commercials in person…and buying his steel from Japan.

I don’t think it matters a whit whether or not your friend is correct. You should buy a Cessna.

William, do you have the same concerns when you fill the gas tank of your car?

You have been “deciding” which plane to buy since July. You have failed to invest $50 to be a member. You have brought up controversial subjects in your previous posts. Your spelling is poor.

There were similar concerns that the Japanese would own all of the real estate in the U.S. in the eighties. Look at them now. Our strength in the U.S. comes by the freedoms we enjoy, and the vision of entrepreneurs, who live in a nation that fosters innovation.

Cessna is now feeling the pressure of Cirrus. They are a good old boy company which has been producing the same line of planes since the 60’s. It took Cirrus, and Crescent, to shake them up to offer Americans an upgraded product.

Go buy a Cessna. And, just to be sure not to have funded terrorists, buy a used one. You will have saved a good portion of the down payment by not joining COPA.

I agree with one of the

I don’t like Cirrus and I wish I had a TB20, but I find the French ownership of Socata more objectionable than the financial interest of the mideast investors in Cirrus. I suspect that the bottom line should really be what plane best suits your needs and who owns what percent of the company is not relevant.

Having done the road show for financing gig on behalf of my company and ultimately ending up with an " 'Merican" bank (which as it turns out is in fact is owned by another company that is ultimately owned by the Japanese and w/ whom we are extremely happy, thank you) I can attest to the challenges Cirrus faced. I unfortunately found that most equity investors - especially US investors - are short sighted and look only to next quarter’s numbers. Not the thing to be eyeing in the airplane biz. Post 9/11 was especially hard for those trying to raise money (I could hear some fund manger saying “you want us to get in the airplane business when that’s what rammed the WTC…you gotta be out of your mind!!!”) The reality of today’s financial markets is that you need to go where the money is and if that means to Boston, Bermuda or Bahrain, then that’s where you go. It sounds like the “Sheiks” made a great investment! Good time to get into a business that US 's have been shunning. I am embarrased for and disgusted by the US VC's who continue to be unable to find good investments to save their respective a@#'s. Or attempt to cut such fat deals that the potential investee is forced to look elsewhere, rather than take their domestic blood money. The concept of patient capital is currently lost on US 's.

AIMHO…cs

What’s all this brouhaha about Saudi shakes?!?


I shared a taxi one evening back from the Customer Center to my hotel with one of the guys that runs the investment company and sits on the board of Cirrus.

For what its worth (you probably won’t believe me because I’m a European… ) my opinion of him was he was an excellent business man, interested in aviation, the GA market and the company just as much as his “investment”. We talked quite extensively about his investment decision and how Cirrus was doing.

I was and everyone should be pleased that Cirrus found such a good quality investor, I was very impressed by their understanding of the company, attitude to risk, and professionalism.

You will also be please to know that he was also a “westerner”, I think he was even American but can’t be sure (I actually don’t care either!).

Just because a company is based off shore, does not mean that there is any thing wrong with it! I think its absolutely silly that someone would base an aircraft purchase decision on the basis that “The company banks in a different country to me, so I can’t trade with them”. How small-minded and daft!.

Ian

“they have not made any money on the deal and as investments go it has to be a marginal one”

their method of operation is to take companies public at least some of the time and in those cases obviously they do quite well…

Dont you guys watch the news? It’s money from illegal knock-off purses, knock-off clothes, movies, and CDs that fund terrorists. The RIAA also says that mp3 downloading supports terrorists…okay, now back to reality. Even if it is true that these “Arab Shieks” own most of CD, what’s wrong with that? To say that these particular people “don’t like Americans” is a pretty racial statement. Did you meet these folks? Did they throw some rocks at you? I dont think so.

Jim:

Thank you for your thoughtful review of the particulars. As a Cirrus partner, I am appreciative of Crescent’s participation.

David Schwietert 203 RF PFD/TKS

Well Said!!

Jim,

Thanks for the insight into the world of international finance. As an owner of a small technology manufacturing firm, I can well attest to the struggles that we all go through as we try to finance growth. I think that Cirrus looked at ALL of the options, and decided that it did not want to just exist, it wanted to excel! I doubt that there are too many folks who would dispute the fact that today Cirrus excels in the marketplace (Dale and Alan, don’t read this to assume that there is not still room for additional improvement here, but you guys have done a damn good job!)…From my vantage point, it appears that Cirrus’ financial partners are not too much different from most other investors. They are looking for a good return on their investment. I think that Cirrus has figured out how to offer a good return during the last year. Whether it is investment capital from the Bank of America, or the Bank of Bahrain, the goal of the investors is pretty much the same.

I wonder how many of us have ever pondered who currently owns the mortage on our home (it seldom stays with the original lendor). Do you really care??..doubtful!!..Just be thankful that Cirrus ended up finding a good partner in the Bank of Bahrain and not from one of the U.S. titans of industry like Enron, Worldcom ,or heaven forbid one of those nasty Bermudian companies like Tyco or Global Crossing…sorry to seem cynical, but I have walked in Cirrus’ shoes in a small way.

The bottom line is that Cirrus went to the world financial markets and found a reliable investor who put cash on the table but let Dale and Alan continue to work their magic. After waiting a very long time for my SR22, I for one am darn glad that they were as successful in their search for capital as they have been in designing AND manufacturing airplanes!

good point mark. he probably works for lancair. :slight_smile:

In reply to:


Your spelling is poor.


Don’t rag on him because he can’t spell. Most of the forum members would be in trouble.

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There were similar concerns that the Japanese would own all of the real estate in the U.S


They don’t own it all, just most of it. They do own most of the car market.

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I agree with one of the . . .


That’s an incomplete sentence . . . although it’s not misspelled

You have failed to invest $50 to be a member

What the hell is up with you and the others that bash anybody who has not joined COPA?

This is a public forum, should we not be here? If we wanted to become members, we would and most of us will when we are ready and want to. $50? Who gives a shit about $50? We are all here because we have an interest in AVIATION which by definition makes $50 toilet paper. I own an archer, I like cirrus but am not willing to pay the 10k insurance for a friggin sr20. I am building hours, now up to 138 with 8 lessons left on my IR, and when I obtain sufficient hours to bring the insurance down to something I deem acceptable, I WILL join but certainly not because you or any other insult and bash someone who visits a public free forum for not joining your little club for a measly ass $50. I burn that in fuel every lesson, I drop that at lunch every other day, get real and get off your “Pay or you don’t deserve to visit the public free forum” bandwagon.

Rick