The Mendota Heights-based carrier that survived the financial meltdown of former owner Tom Petters was sold to the ownership of Cambria Holdings, the countertop and quartz surface giant based in Le Sueur, Minn.
Sun Country Airlines, the self-described "Hometown Airline," now has home-grown owners.
The Mendota Heights-based carrier that survived the financial meltdown of former owner Tom Petters was sold Wednesday to the ownership of Cambria Holdings, the countertop and quartz surface giant based in Le Sueur, Minn.
The Davis family of southern Minnesota paid an undisclosed price for the lone Minnesota-based commercial airline, following lengthy negotiations and an auction in U.S. Bankruptcy Court in St. Paul. Bankruptcy trustee Doug Kelley described the purchase as "substantially above" the $24 million floor price he set when Sun Country was put up for sale earlier this year.
"This is how bankruptcy ought to work," said Kelley, the trustee in charge of the Petters estate, which is still in Bankruptcy Court.
"The creditors get top dollar, and the community saves 850 jobs."
Cambria CEO Martin Davis was equally pleased with the deal.
"We've always been very enthused by management and by the employees we met as customers of the company," Davis said.
Airline analyst Terry Trippler said the acquisition will be good for Sun Country if the new owners are willing to put some new money into the carrier.
"What this airline needs is money -- backing. It's moving in the right direction but it's always been short on cash," Trippler said. "This might be a crazy time to buy an airline, but it is not a crazy time to buy Sun Country."
For now, though, the Davis family plans no changes to the airline's operations, management or frequent-flier program.
Stan Gadek, Sun Country president and CEO, called the transaction "an exciting day for our employees, our customers and the communities we serve."
"We look forward to working with our new owners to continue to expand our services," Gadek said.
The Davises, who call St. Peter home, have operated a successful dairy and cheese business in southern Minnesota for more than 60 years. Under the name Davisco Foods International, the company produces 330 million pounds of cheese a year and is one of the largest suppliers to Kraft Foods. Davisco is not part of the Sun Country acquisition.
Cambria Holdings, which is behind the acquisition, is located outside of Le Sueur above the Minnesota River valley. It has had two major expansions since it opened 10 years ago, although it has suffered some economic fallout from the housing recession. Nonetheless, the company is the largest manufacturer of quartz surfaces in the United States and employs more than 600.
For the Davises, business is a family affair. Martin Davis' father, Mark, is chairman of Cambria. Grandfather Stan Davis, who is retired, founded Davisco Foods. Martin Davis' mother, Mary, brothers Matt, Mitch and Jon and sister Julie Rydeen also are involved in the companies.
A soft landing
Sun Country was once part of the corporate estate of Petters, a former Wayzata businessman whose business and personal world collapsed under the weight of a $3.65 billion Ponzi scheme that he ran until 2008.
Sun Country, then cash- starved, entered bankruptcy just before the Petters fall, obtained a badly needed $5 million loan from Kelley and the Petters estate, and drastically cut expenses, including salaries. It successfully emerged from bankruptcy last February as a money-making carrier.
"They couldn't borrow a nickel after being associated with Tom Petters," Kelley said.
Sun Country reported profits of $13 million last year after combined losses of nearly $60 million in 2007 and 2008. The airline posted a profit of $1.4 million in 2009.
The Petters bankruptcy estate will receive 56.6 percent of the sale price. Whitebox Advisors, which helped Petters acquire Sun Country, will get about 43 percent.
Kelley praised federal prosecutors for not claiming the airline through forfeiture and putting it out of business and U.S. District Judge Ann Montgomery for approving the $5 million loan that kept the airline aloft.
Sun Country, once known for its routes to winter vacation spots for weary Minnesotans, has 12 aircraft in its fleet, provides scheduled service to business as well as leisure destinations and is actively providing charter service for military personnel. The airline also is providing service to London for a second summer season.
Dan Boivin, chairman of the Metropolitan Airports Commission, said he is "very encouraged" to see local ownership of Sun Country.
"Sun Country is doing all the right things. Their frequencies have to increase, but if they succeed, that allows us to expand Terminal 2," Boivin said. Sun Country and Southwest Airlines are the largest tenants of Terminal 2, also known as the Humphrey terminal.
David Phelps • 612-673-7269