CPI Aerostructures sues Air Industries over incomplete deal for welding unit
Aircraft parts are manufactured at CPI Aerostructures in Edgewood in 2012. Credit: Jeremy Bales
CPI Aerostructures Inc. has filed a lawsuit against another Long Island aerospace manufacturer, charging that it breached a contract to sell a subsidiary.
CPI Aero is seeking at least $5 million in damages plus expenses.
The lawsuit, filed Thursday in State Supreme Court in Manhattan, charges that Hauppauge-based Air Industries Group failed to abide by a contract to sell its Welding Metallurgy Inc. subsidiary to CPI Aero.
The complaint seeks an order directing Air Industries to "perform all of their respective obligations under the agreement."
The $9 million deal to sell Welding Metallurgy, announced in March, had been expected to close in the second quarter of 2018.
In the lawsuit, CPI Aero said the failure of Air Industries to abide by the contract caused it "irreparable damage." CPI Aero had said it planned to move Hauppauge-based Welding Metallurgy to its 171,000-square-foot facility in Edgewood.
In a news release issued late Thursday announcing the lawsuit, CPI Aero chief executive Douglas McCrosson said Air Industries rebuffed his company's offer "to devote significant resources to remediate Air Industries' failure to provide inventory data" needed to prepare financial statements to close the deal.
Luciano "Lou" Melluzzo, CEO of Air Industries, said in an interview Friday that CPI Aero filed the lawsuit as "a formality for their shareholders."
Melluzzo said his company complied with the terms of the contract, but that CPI Aero abruptly halted its efforts to acquire Welding Metallurgy.
"We provided everything they asked for," Melluzzo said. "They dropped their pencils about three weeks" before the deal was scheduled to conclude.
Melluzzo said the uncertainty surrounding the transaction caused some workers at Welding Metallurgy to leave the company, prompting Air Industries to back off the deal after the termination date of June 19 had passed.
Welding Metallurgy is down to about 59 workers from about 70 when the deal was announced, he said.
Melluzzo said the company was still formulating a response to the lawsuit.
"We're still talking to legal," he said. "We're prepared to do what we have to do."
Shares of CPI Aero rose 20 cents Fridayto close at $9.80, while stock in Air Industries fell 10 cents to $1.50.
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