NABIs Pulled from Service

[Busjack]

Yeah, I thought CTA should be entitled to at least half of what the contract stipulates, around 51.5 million, considering they only got half of the FTA service life, 6 out of 12 years, out of the buses. One has to wonder if this will bankrupt NABI. 36 million is alot of money for a company to swallow. I wonder would it be feasable to plead bankruptcy and just regroup as another company? ( might not be possible if their assets were frozen) Obviously there's probably going to be a appeal motion filed by NABI if that's possible. (sorry I'm not a lawyer) So it might be a few more years still. If this is the final judgement, one has to wonder how CTA will spend the money on it's infrastructure (more likely) or the purchase of new equipment which is usually funded through the federal government. (again legalities might restrict their decision)

• The issue on the amount is depreciation. I figured slightly less depreciation in that the oldest were 6 years old but the newest were 4. But in a settlement, you get what you can get.
• As I indicated above, whatever the depreciated value was, you have to deduct the $13 million withheld from NABI and the $1 million scrap.
• Since it is a settlement, rather than a trial, no appeal.
• Bankruptcy would depend on whether Cerberus wants to scuttle this investment, like it scuttled Chrysler. However, an argument could be made that if it did so, it engaged in the settlement in fraud, and thus the debt would not be dischargeable in bankruptcy. Nonetheless, I also assume that CTA is still holding onto performance bonds, which would not be discharged in bankruptcy since the surety would be on the hook (note that the surety company was a party to the lawsuit).
• Also note from the article that the amount is payable over 5 years and also depends on how a parts supply contract with NABI turns out.
• Finally, the disposition of the proceeds goes back to Rodriguez saying that Huberman was negotiating with the feds regarding their share of the grants, which was about half. But I'm sure that will be covered by CTA coincidentally having to lease 150 4000s.

[Busjack]

I found this part of the article interesting, if not disturbing:

Under the settlement announced Monday, the CTA will receive between $31.25 million and $36.25 million over five years. The actual payment amount will depend on a separate agreement the CTA has with NABI to provide spare parts for other buses in the CTA fleet. In addition to manufacturing buses, NABI is in the after-market parts business.

NABI is providing spare parts for New Flyer , Nova, and Optima buses? I expect Optima, as they are owned by NABI, but I certainly hope they are not providing spare parts for the other two makes

You would have to go back into the CTA Vendor database and see what the particular contracts are.

IIRC most of these are not for parts manufactured by NABI (which pretty much only manufacturers the shells) but other brand name products. I was able to get something out of the database by entering "North" as the vendor, and got entries such as "ELEMENT: FILTER & O-RING, FOR BENDIX" and "BLADE: FAN - KYSOR." It shouldn't make any difference whether the NABI or New Flyer parts operation sells a Bendix part.

In fact, that search also shows some parts purchases from Daimler Buses North America, and we know that CTA didn't have any Orions--edit except for the ex-Pace 4900s, which had nothing to do with Daimler.

[BusHunter]

Somehow I missed the word "settlement" which throws bankruptcy and appeal out the window. Since they settled on an amount, NABI or Cerberus would be bound to the agreement.

[Busjack]

Somehow I missed the word "settlement" which throws bankruptcy and appeal out the window. Since they settled on an amount, NABI or Cerberus would be bound to the agreement.

Except that's what's bankruptcy is all about. Those people who call Peter Francis Geraci to get their credit card payments reduced agreed to pay the credit card company. Those going into bankruptcy to get some relief on their mortgages agreed to pay the note when they signed it (except in that case the house is still security).

The difference I implied with regard to this agreement is that if it were made with the intent to go immediately into bankruptcy, it would be fraudulent. And, like your house, any performance bond is security, and another fundamental principle is that the surety is not discharged on the debtor's bankruptcy, because that's why the creditor demands a surety bond. I'm not going to say that I know what performance bonds CTA is still holding, though.

[BusHunter]

I found this part of the article interesting, if not disturbing:

Under the settlement announced Monday, the CTA will receive between $31.25 million and $36.25 million over five years. The actual payment amount will depend on a separate agreement the CTA has with NABI to provide spare parts for other buses in the CTA fleet. In addition to manufacturing buses, NABI is in the after-market parts business.

NABI is providing spare parts for New Flyer , Nova, and Optima buses? I expect Optima, as they are owned by NABI, but I certainly hope they are not providing spare parts for the other two makes.

That may be hard to find out. According to the spare parts brochure here:http://www.nabusind.com/ampartsmap/aftermarket-parts.htm they make OEM brakes, water pumps, alternators among other things. If your wondering what OEM means http://en.wikipedia.org/wiki/Original_equipment_manufacturer according to Wikipedia they can manufacture parts under a different name. Like for example they can make Ford products and put the Ford name on them as Ford parts. Clever on their part, scary on the buyers part.

[Busjack]

That may be hard to find out. According to the spare parts brochure here:http://www.nabusind.com/ampartsmap/aftermarket-parts.htm they make OEM brakes, water pumps, alternators among other things. If your wondering what OEM means http://en.wikipedia.org/wiki/Original_equipment_manufacturer according to Wikipedia they can manufacture parts under a different name. Like for example they can make Ford products and put the Ford name on them as Ford parts. Clever on their part, scary on the buyers part.

From what I answered art, that does not seem to be the case (and going into Wikipedia is always a trap).

I'll be that there aren't any, or maybe only a few NABI parts in a NABI bus. In fact, one of the reasons why CTA withheld payment was that NABI did not give them the parts supplier list. But obviously the NABI bus contained such things as a DD engine, Wabtec Vapor* door controls, and the like.

In fact, if you go back to the NABI page you cited, the right hand column has a list of parts on hand, and the only one branded as NABI is the remanufactured transmission. For instance, Sludgebraker comes from Graham-White Industries.

___

*Corrected.

[BusHunter]

From what I answered art, that does not seem to be the case (and going into Wikipedia is always a trap).

I'll be that there aren't any, or maybe only a few NABI parts in a NABI bus. In fact, one of the reasons why CTA withheld payment was that NABI did not give them the parts supplier list. But obviously the NABI bus contained such things as a DD engine, Wabco door controls, and the like.

In fact, if you go back to the NABI page you cited, the right hand column has a list of parts on hand, and the only one branded as NABI is the remanufactured transmission. For instance, Sludgebraker comes from Graham-White Industries.

But isn't that the point. We are led to believe the Sludgebraker comes from Graham-White industries when in fact it is remanufactured through NABI with the Graham seal of approval? Naming something as a NABI product would most likely only be compatible with NABI products or there's no incentive to rename it.

What exactly are you saying, all these parts are only compatible with a NABI bus?

[BusHunter]

Except that's what's bankruptcy is all about. Those people who call Peter Francis Geraci to get their credit card payments reduced agreed to pay the credit card company. Those going into bankruptcy to get some relief on their mortgages agreed to pay the note when they signed it (except in that case the house is still security).

The difference I implied with regard to this agreement is that if it were made with the intent to go immediately into bankruptcy, it would be fraudulent. And, like your house, any performance bond is security, and another fundamental principle is that the surety is not discharged on the debtor's bankruptcy, because that's why the creditor demands a surety bond. I'm not going to say that I know what performance bonds CTA is still holding, though.

Which makes me wonder why they agreed to a multi year repayment. This would give NABI a way to weasal out of the deal. Wouldn't a pay it all plan be fradulent if they then turned around and said well we're bankrupt?

[Busjack]

But isn't that the point. We are led to believe the Sludgebraker comes from Graham-White industries when in fact it is remanufactured through NABI with the Graham seal of approval? Naming something as a NABI product would most likely only be compatible with NABI products or there's no incentive to rename it.

What exactly are you saying, all these parts are only compatible with a NABI bus?

No.

What I am saying is that the NABI parts operation stocks parts from other manufacturers. So does the New Flyer operation^ and until a couple of weeks ago, so did Daimler, which sold its operation to New Flyer.

It doesn't matter which of the above has that brand of parts, just like it doesn't matter if you get a replacement turn signal lamp for your car from the Ford dealer, NAPA, or Pep Boys (I'm assuming an incandescent one, as the LED ones have quirks).

*Which says "We distribute genuine Original Equipment products for all major transit component suppliers as well as our own private label of parts - New Flyer Kinetik™." I doubt that NABI has a private label, and CTA wouldn't send out a requisition for such.

[Busjack]

Which makes me wonder why they agreed to a multi year repayment. This would give NABI a way to weasal out of the deal. Wouldn't a pay it all plan be fradulent if they then turned around and said well we're bankrupt?

Sure as to your last one.

The first one may be a matter of "how much they can squeeze the turnip." Obviously money now is worth more than 5 years down the road, although with interest rates today, not that much more.

[Busjack]

In a first for Chicago media (or at least Fox Chicago), the file footage on Fox 32 Noon News actually was of 7700s.*

Had the wrong dollar value of the settlement, though.

________

*But apparently not on the morning news.

[BusHunter]

In a first for Chicago media (or at least Fox Chicago), the file footage on Fox 32 Noon News actually was of 7700s.*

________

*But apparently not on the morning news.

I bet New Flyer liked that picture!!

[Busjack]

I bet New Flyer liked that picture!!

Unless it came up on Fox Morning News Twin Cities, I doubt that they saw it.

And I didn't wake up in time to see it here.

[Railwaymodeler]

The bus parts sounds like your average home desktop PC. Be it from Dell, HP, Gateway, who-have-you, the casing is generally the only manufacturer specific part. The CPU is made by either Intel or AMD, the video card or onboard video chip is by Intel, AMD, Via, nVidia, or others. You get the idea. I can take a plug in part, like a modem or hard drive, and switch it to another desktop of another make. Even Xbox systems use Intel chips, and I've used Xbox DVD drives inside PCs before.

So far as they are, most of the difference in brand names is case styling, though along with the looks, some cases allow better airflow by design, which prolongs life, and to some extent, some brands have better quality control of parts coming in for assembly.

That may be how NABI supplies parts. Of course, some minor things, like handrails or stirrups can be bought on about any bus. Perhaps windows can be made to fit easily too. I suppose no one would care if a window pane from a NABI was used in a New Flyer.

[renardo870]

$36.25 million out of $87 million settlement over 5years? I want to say that is robbery but CTA didn't pay the final $15 million to NABI, so i guess thats fair exchange, huh??? WOW

[Busjack]

$36.25 million out of $87 million settlement over 5years? I want to say that is robbery but CTA didn't pay the final $15 million to NABI, so i guess thats fair exchange, huh??? WOW

As I said before, depreciation. You don't get to use a bus for 6 years and treat it as new. Will a dealer give you $22,000 for your 2007 Honda Civic? Kelley Blue Book says $10,000.

But if you did your math correctly, the $87 million takes into account that CTA didn't make the final payment.

[renardo870]

As I said before, depreciation. You don't get to use a bus for 6 years and treat it as new. Will a dealer give you $22,000 for your 2004 Honda Civic?

But if you did your math correctly, the $87 million takes into account that CTA didn't make the final payment.

I remember that the $15mil withholding is what began this sorry process

[Busjack]

I remember that the $15mil withholding is what began this sorry process

You remember correctly that that withholding is what started the news coverage. Obviously, there was something before that that resulted in CTA deciding to withhold.

[renardo870]

It's a shame the buses couldn't be rebuilt here or with NF. But I guess couldn't have a load of artics driving down Chicago, huh? Especially since Chicago, Forest Glen and 74th arent 60ft artic ready yet? Ha!!!

[jajuan]

It's a shame the buses couldn't be rebuilt here or with NF. But I guess couldn't have a load of artics driving down Chicago, huh? Especially since Chicago, Forest Glen and 74th arent 60ft artic ready yet? Ha!!!

There's no need for them now since they're getting the current 100 extra from NF and the 50-150 extra beyond that to come from the yet to be announced manufacturer for the artic part of the same deal that's bringing the maybe 350 40 foot buses from NOVA. Where do you think they're supposed to store close to 700 artics if they were to have kept the NABIs and did rebuilds? We're going to have maybe up to 450 some artics without them when it's all said and done so that's a waste of money to talk or think about rebuilding buses that haven't been on the streets in roughly 5 years.

[renardo870]

So true

[Busjack]

It's a shame the buses couldn't be rebuilt here or with NF. But I guess couldn't have a load of artics driving down Chicago, huh? Especially since Chicago, Forest Glen and 74th arent 60ft artic ready yet? Ha!!!

There's no need for them now....

The issue (at least according to the Rodriguez administration's account) was that based on an inspection of some of them, they were so structurally deficient that CTA doing anything more (including stripping and inspecting the remainder) would not have been cost effective.

Hence, not needing them now isn't wholly relevant, unless you believe the original Huberman story that the reason the 4000s had to be leased was for a 3 for 4 replacement of Flxibles. Nobody now does.

[jajuan]

The issue (at least according to the Rodriguez administration's account) was that based on an inspection of some of them, they were so structurally deficient that CTA doing anything more (including stripping and inspecting the remainder) would not have been cost effective.

Hence, not needing them now isn't wholly relevant, unless you believe the original Huberman story that the reason the 4000s had to be leased was for a 3 for 4 replacement of Flxibles. Nobody now does.

No I don't believe it. But my point is with regards to need is that we're getting 100 artics close to finishing delivery now and CTA is hammering out the selection of another manufacturer be it NF or somebody else to manufacture up to 150 more depending on where they think they can place artics elsewhere in the system. So to going back to rebuild buses out of service for 5 years is a waste of time and money.

[sw4400]

No I don't believe it. But my point is with regards to need is that we're getting 100 artics close to finishing delivery now and CTA is hammering out the selection of another manufacturer be it NF or somebody else to manufacture up to 150 more depending on where they think they can place artics elsewhere in the system. So to going back to rebuild buses out of service for 5 years is a waste of time and money.

Pretty sure that when this 150 artic order is announced, CTA will give it to New Flyer for more D60LFR and DE60LFR buses. NOVA Bus is still fairly new to the articulated bus market, with the first artic order being placed in 2009 for NYCTA. Last month, NOVA announced a plan to test an articulated bus on high traffic routes at Walt Disney World Resort. Outside of New Flyer, I don't think there is a company that makes articulated buses, both in Clean Diesel and in Hybrid, that is proven. Don't need to mention NABI... big NO there. That's about it....

Not knocking NOVA Bus, they make good 40' buses, but the CTA got burned by NABI in 2003, which was also fairly new to the articulated market.

[Busjack]

.... So to going back to rebuild buses out of service for 5 years is a waste of time and money.

I don't think renardo was suggesting that, only that they could have been rebuilt in 2009....except CTA determined that they couldn't, at least economically.