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Navistar trading resumes after 1-hour halt

Investors react to scraps of news that the Warrenville truck and engine maker's defense segment has apparently suffered a setback in the competition for a major new Pentagon contract.

By James P. Miller | Tribune staff reporter

1:47 PM CDT, April 2, 2009

Trading in Navistar International Corp. shares was halted for nearly an hour Thursday afternoon, after the Warrenville truck maker's stock went into a skid on indications that the company's fast-growing defense segment has apparently suffered a setback in the competition for a major new Pentagon contract.

By the time trading was halted just after noon Central time, Navistar shares were down $4.67, or 14 percent, at $29.16.

Not long after trading resumed, however, the stock's swoon began to ease and Navistar shares were trading down a more modest $3.72., as of 1:30 CDT.

Although Navistar's economy-sensitive commercial-truck business continues to languish in a cyclical trough, the company's profits have been kept afloat with the contribution from its once-tiny defense group. Navistar has won billions of dollars worth of contracts to make a heavily armored vehicle known as the MRAP, which is specifically designed to resist the blast of roadside bombs used widely in Iraq.

Those MRAP contracts, while lucrative, were never expected to be a longterm market , and the orders that fattened Navistar's revenues over the past 18 months are already winding down.

But the Pentagon is planning to let a contract for a lighter, more maneuverable MRAP-style vehicle, with all-terrain-vehicle attributes, to be used in the rougher and more isolated Afghanistan field of conflict.

Navistar is one of several defense contractors competing for the so-called "M-ATV" program, which may yield orders for as many as 2,000 such lighter vehicles.

In February, the company provided the Pentagon with two prototypes of its proposed M-ATV, for consideration. The Defense Department has said it wants to issue a contract, to a single producer, in June of this year.

This morning, however, a specialty publication known as InsideDefense.com reported that, although the M-ATV bidding process remains in very early stages, Navistar has already filed a protest with the General Accountability Office.

Precisely why the company opted to file a protest about the competition at this early stage wasn't immediately clear, nor was the document available.

The company initially declined to comment on the protest at all, beyond confirming that it did in fact file one on March 30.

After the trading halt, however, Navistar issued a less-than-illuminating statement saying its defense operation "is in discussions with the government over a technicality in the evaluation" of its M-ATV model.

Navistar didn't say what the technicality involved, but later in the statement it said company officials are "confident that our M-ATV design is worthy of consideration."

A spokesman, citing the state of the discussions with the government, said he couldn't go beyond the language of the release.