Foreign Capital Saves Another VLJ Manufacturer

Over the objections of Portfolio Real Estate in Englewood, Colo., which owns the Adam building at Centennial Airport in Colorado, the bankruptcy court overseeing the Chapter 7 filing of Adam Aircraft, approved the acquisition of the company by a Russian conglomerate, making it the third time foreign capital...

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Over the objections of Portfolio Real Estate in Englewood, Colo., which owns the Adam building at Centennial Airport in Colorado, the bankruptcy court overseeing the Chapter 7 filing of Adam Aircraft, approved the acquisition of the company by a Russian conglomerate, making it the third time foreign capital has come to the rescue of a general aviation/very light jet manufacturer. Both Eclipse and Epic, two other VLJ manufacturers, were able to secure additional financing recently by tapping international investors in Russia and India, respectively.
The real estate company charged that the deal was undercapitalized at $10 million citing the fact that Adam had been seeking between $75 million and $150 million to stave off bankruptcy. Related Story  The acquiring company – AAI Acquisition Inc, plans to restart the company and continue to base it at Colorado’s Centennial Airport. AAI was launched by Industrial Investors, a private equity firm, in order to buy Adam for some $10 million in addition to honoring any contracts. The sales agreement names Dmitry Shokhin as vice president of AAI, according to the Denver Post.
Certification for the company’s Very Like Jet – the A700 – will likely have to begin anew owing to the change of ownership. While the process may build on some of the past work, speeding it up, the FAA also has to re-certify the production certificate for the A500 propeller driven aircraft already on the market. Adam had a backlog of 400 for the A500 twin piston and the A700 very light jet when it entered bankruptcy. The deal has the potential to continue and saves the 300 jobs cut when the company filed for Chapter 7 in March. AAI had continued the employment of about 50 employees while it hammered out a deal for the acquisition. However, plans for Adam’s Pueblo, Colo and Ogden, Utah sites remain murky with the Post which reported that there are no immediate plans to re-open them.
"We need to concentrate on the Centennial location," said Shokhin told the Post, which also reported that AAI negotiated a loan of up to $50 million from parent-company Industry Investors, which hopes to tap the emerging air taxi market though Dexter, its air taxi operator.
Observers doubted the acquisition would make much difference. Teal Group Analyst Richard Aboulafia told the Post that the company’s costs are too high for a start up and the market is inadequate for its aircraft.