Company Must Secure Two Rounds Of Financing To Avoid Liquidation

A recent letter to stockholders in Adam Aircraft details the planemaker's current financial woes, and spells out what needs to happen for the company to survive.

The Wichita Eagle reports the letter, dated January 15, states the company's future hinges on completion of two successful financing transactions -- the first of which calls for Adam to raise $30.5 million by the end of this month. The company reportedly secured $5.5 million of that 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, signed by Adam Aircraft CEO John Wolf.

If either of those funding rounds proves unsuccessful, the company would be forced into liquidation, the letter continues -- meaning stockholders would have "little possibility of a recovery" of previous investments.

As ANN reported last Thursday, Adam laid off approximately 300 of its 800 workers, and halted operations at its production facility in Ogden, UT. The company cited a need to conserve existing funds as the planemaker works to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reason for the layoffs.

To sweeten the deal, Adam is also offering a 49.9 equity interest in a newly-formed subsidiary company to those who invest this month.

"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."

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

The company's present financial difficulties come as Adam had prepared to ramp-up production of its A500 twin-engine prop plane, and is close to obtaining FAA certification for the A700 very-light-jet -- which shares much in common with its piston-powered sibling.

FMI: www.adamaircraft.com