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Letter details Adam Aircraft´s woes

Letter details Adam Aircraft´s woes

Adam Aircraft Industries told stockholders in a letter that the company´s future depends on two successful financing transactions. Without them, officials will be forced to liquidate the Englewood, Colo.-based company, the letter said.

The first step is to raise $ 30.5 million by the end of January. It secured $ 5.5 million of the amount in late December.

"A successful completion of this financing transaction will enable AAI to continue to operate until a second, larger equity financing of at least $ 100 million led by Citibank can take place on or before May 31," said the letter, dated Jan. 15 and signed by Adam Aircraft chief executive John Wolf.

But Adam Aircraft must successfully complete the first round of financing by the end of January or immediately liquidate the company in order to satisfy obligations to its "senior lenders," Wolf said in the letter. If that should occur, stockholders have "little possibility of a recovery" of their previous investments, it said.

"It´s like every other loan or any other type of funding," said company spokeswoman Shelly Simi. "There´s always stipulations or requirements and that´s what we´re working through as every other company would."

Because of the company´s financial difficulties, Adam also is offering a 49.9 percent equity interest in a newly formed subsidiary to those who invest in this month´s financing transaction, the letter said.

"I believe that AAI is offering its stockholders a unique investment opportunity today," the letter said. "I believe the Company is on the verge of a major upturn in revenue." That upturn is expected from pending production increases of Adam Aircraft´s A500 twin-engine piston aircraft, and -- after obtaining government type certification -- a similar production ramp up for its A700 very light jet, the letter said. The A700 is currently undergoing flight test and development. Last week, Adam officials said they were revising the company´s overall production plans and laid off 300 of its 800 workers. It also halted operations at its production facility in Ogden, Utah. Officials said the company had to focus on managing its current cash expenses to get enough time to obtain long-term financing.

"We´re off to a good start in this effort with our assistance from our partner, Citibank, but we need to be able to provide them with sufficient time working with potential investors to secure long term financing," the company said last week.

/ Новости