Council silent on aviation company's struggle with $2.5m loan

Council in January, 2012, resolved to lend the company up to $2.5 million to help meet the costs of building a large hangar at the Forest Hill airport.

The loan agreement included security by way of a mortgage over the hangar and a legal instrument over property assets provided by Douglas Aerospace principal Douglas Clarke.

Founded in Tocumwal in 1979, Douglas Aerospace is up and running at the airport and has successfully completed a number of major refurbishment jobs, earning praise from customers, including an executive jet company.

But it has hit some hurdles, including a legal stoush with the builder of the hangar, Albury-based Indistri Engineering.

"We are not neglecting it, we are putting everything into it," Mr Clarke said of the loan.

Douglas Aerospace in April was ordered by the District Court to pay Indistri Engineering $229,320 for unpaid progress payments, materials delivered on site and interest dating from an adjudication in favour of Indistri Engineering in March.

But Douglas Aerospace is strongly disputing the builder's claim and the matter is currently before the courts.

"There have been issues between Douglas Aerospace and the principal contractor which are now being resolved by the people qualified to do so, solicitors," said Claire Clarke, a key member of the family-owned business.

"The adjudication that was awarded to Indistri Engineering is unjustified," Mr Clarke said.

"We are defending our position 100 per cent through the Supreme Court."

Indistri Engineering principal Adrian Robinson declined to comment, saying the matter was in court.

The details of Douglas Aerospace's talks with council are being kept confidential but it is understood to involve renegotiating some of the repayment terms.

It is understood the full loan amount has not yet been drawn down.

Ms Clarke said Douglas Aerospace understood the importance of ensuring the agreement between council and Douglas Aerospace was upheld, and has made this a priority within the business from the beginning of operations.

"It is still a top priority today, and will continue to be," Ms Clarke said.

"There have been payments made this year.

"All monies will be paid back in full."

Council general manager Phil Pinyon declined to answer 11 questions from The Daily Advertiser on the standing of the Douglas Aerospace loan, including details of repayments made or not made.

Instead, council issued the following statement:

"You will appreciate that these are questions that go to the private financial position of Douglas Aerospace.

"As such, it would not be appropriate for council to discuss them publicly.

"Of course, council expects that any person who contracts with council will comply with the contract and ratepayers can be assured that council takes the appropriate steps to protect their interests."

Mr Clarke said the company had been faced with some issues due to unforseen changes in the aviation market.

"I do not know of any business or any industry that does not come across challenges of a similar nature at various stages," Mr Clarke said.

Amid the challenges, Mr Clarke pointed out his company had attracted high profile clients to the Wagga operation and had completed jobs ranging from small general aviation planes through to regional aircraft and large corporate jets owned by Australian and international interests.

He stressed the company had relocated staff to Wagga and had employed and trained local people.

"The Wagga City Council and community have been a great support for the project from the beginning and to date, and overall it's been a good experience," Mr Clarke said.

"Douglas Aeropsace today is committed to the success of the project just as much as we were when it was merely an idea, not for our sake and our employees' sake alone, but for the community and, importantly, for the aviation industry in Australia."