A Savior for Lockheed

Since last December, Lockheed Aircraft Corp. has been openly looking for a savior that would prevent it from finally running out of cash after three years of hairbreadth escapes. Late last week it found one: Textron Inc., the giant conglomerate (1973 results: $1.9 billion sales, $101 million net). The investment banking firm of Lazard Freres put together an involved plan under which Textron would pump more than $75 million into Lockheed and receive in return up to 45% of Lockheed's common stock. Other features: major banks will take preferred stock in Lockheed in settlement for $300 million in loans, and the Federal Government will thus be released from its guarantee to see that $250 million of those loans are repaid.

The deal goes before both Lockheed's and Textron's boards for approval this week and could still hit several snags. Over the weekend, Lazard was still searching for someone, presumably a bank or group of banks, willing to put an additional $25 million into Lockheed. Also, major airlines will have to convert a number of provisional purchases of Lockheed's L-1011 TriStar into firm orders, and the British government will have to commit its nationalized Rolls-Royce firm to make more powerful jet engines for an intercontinental version of the TriStar. If all that happens--and the U.S. Department of Justice overlooks the fact that both Lockheed and Textron make helicopters--the deal will take effect Oct. 1.

The arrangement is not a merger: Textron and Lockheed will remain separate companies. Lockheed talked outright merger with several companies, including General Dynamics, but found no firm willing to give Lockheed an open-ended call on its assets. No wonder. Lockheed lost $119 million in 1969 and 1970 combined. Last year it earned a mere $17 million on sales of $2.8 billion, and cash from delivery of TriStars is still coming in too slowly to cover production expenses. Though it is not certain that even Textron's aid will save Lockheed in the long run, Lockheed officials do seem to have demonstrated once again their remarkable talent for finding ways to keep the company alive.

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