Adam’s Future Depends on Financing

Shortly after imposing layoffs, announced nearly two weeks ago, Adam Aircraft Industries sent a letter to investors saying it would be forced to liquidate if does not achieve two financing transactions on which it is working. Related Story Spokesperson Shelly Simi indicated the company plans to make an announcement early this week.
The letter was described by company officials as providing a “unique investment opportunity” for those who invest now, in which investors would gain a 49.9 percent equity interest in a new subsidiary for the $25 million it needs immediately. In December it raised $5.5 million of the $30.5 million it needs to continue operations beyond Thursday, according to the company. Failing that, it would be forced to liquidate in order to satisfy obligations to major lenders.
As a private company, Adam Aircraft would not disclose any specifics other than what was in the letter, especially about the subsidiary. Simi said the company is working on determining the best solution for the company. “Whatever funding that takes place, Adam Aircraft will continue,” she said, “although I don’t know what the funding structure or the company will look like at this point.”
The announcement came after the company revealed it was laying off 300 of 800 employees was part of an effort to streamline the manufacturing process. Adam is seeking between $75 million and $150 million in long-term financing with the help of Citibank, according to Adam Aircraft President Duncan Koerbel, who called the situation temporary.
"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 Chief Executive John Wolf. Adam Aircraft has a backlog of 400 for the A500 twin piston and the A700 very light jet and hopes to achieve a build rate of 12 to 15 per month for the A700 very light jet.