Boeing wants Hughes to refund ‘hundreds of millions’ of dollars, ...
Boeing wants Hughes to refund “hundreds of millions” of dollars, contending Hughes had overvalued satellite manufacturing unit when Boeing made $3.85 billion purchase in Oct. 2000. Companies refused comment, but said dispute would be decided through arbitration at accounting…
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firm. Boeing reportedly is seeking $600 million-$1 billion. They closed deal using “purchase method” that bases sales price on preliminary assessment of fair value of assets. Contract terms allow Boeing to examine whether sales price was equal to value placed on Hughes at time of sale. That’s what arbitrator now must decide. Hughes CFO Michael Gaines said in Oct. 17 conference call that Hughes had agreed to pay Boeing $160 million related to satellite manufacturing unit. Hughes spokesman said $160 million was “mechanical correction” unrelated to sale. Gaines said Hughes had “adequate amount” in reserve to settle dispute Settlement won’t have major financial impact on Hughes because company is receiving $1.7 billion from subsidiary PanAmSat, analyst said. Boeing had determined that goodwill in purchase of Hughes was $740 million and other intangibles was $631 million, according to Oct. 25 SEC filing. It later increased amount to $2.2 billion, but said that since sale image of Boeing Satellite Systems had suffered major setback because of problems and defects found in Hughes’s HS-601 and HS-702 satellite models.