Derlan Announces Breakthrough Helicopter Agreement

Business Wire, May 27, 1999

TORONTO--(BUSINESS WIRE)--May 27, 1999--

(TSE:DRL.) Derlan Industries Limited today announced that its Derlan Aerospace division has signed a definitive agreement with The Boeing Company to develop a new generation of drive train systems for the AH-64 Apache Attack Helicopter.

The contract's value is estimated at more than $500 million over 10 years, making it the most important agreement ever signed by a Canadian corporation for U.S. defense helicopters and one of the most significant air defense contracts awarded in Canada. It culminates a three-year bidding process in which Derlan was chosen over more than 10 other international bidders.

"Once development work is complete, this agreement will significantly increase Derlan's aerospace sales," said Dermot Coughlan, Chairman and CEO of Derlan Industries. "We believe that this new technology will ultimately have other commercial air and marine applications. This will put Derlan Aerospace in the forefront of helicopter drive train technology around the world."

The contract calls for Boeing and Derlan to work together to develop a new drive train technology system for the AH-64 Apache. As part of the agreement, Derlan is granted a 10-year exclusive manufacturing license. The Apache is the principal attack helicopter used by the United States military. The U.S. Army fleet consists of more than 700 Apaches with an additional 300 or more in service, or on order, elsewhere in the world.

As part of the development phase of the project, Derlan Aerospace will undertake design concept testing and build prototype systems at its Milton, Ontario, facility. The new technology will feature face gears which will provide more power in a lighter package, thus improving the cost effectiveness and flight performance of the aircraft.

Derlan is an industrial corporation, manufacturing products for the aerospace and pump industries. The company has operations in Canada, the United States, Mexico and Germany. Its shares are listed on the Toronto Stock Exchange under the symbol DRL.