Adam Aircraft Throws in the Towel

Emerald City aircraft manufacturer files for Chapter 7 bankruptcy protection

“They’re going through another round of financing, and credit markets are very tight right now. I really expect this will be a short-term negative impact, and then they’ll back and everything will go forward as planned.”

Dave Harmer - Director
Ogden City Economic Development Department
Standard-Examiner
January 18, 2008

OPTIMISM, n. The doctrine, or belief, that everything is beautiful, including what is ugly, everything good, especially the bad, and everything right that is wrong. It is held with greatest tenacity by those most accustomed to the mischance of falling into adversity, and is most acceptably expounded with the grin that apes a smile. Being a blind faith, it is inaccessible to the light of disproof — an intellectual disorder, yielding to no treatment but death. It is hereditary, but fortunately not contagious.

Ambrose Bierce
The Devil's Dictionary
1911

Stick a fork in Adam Aircraft, gentle readers; they're done. Despite the rosy optimism expressed in our home town newspaper as recently as two days ago, we now have a report that the financially-troubled Ogden Airport airplane manufacturer has filed a bankruptcy petition, seeking liquidation under the provisions of Chapter 7 of the U.S. Bankruptcy Code.
The Denver Business Journal broke the story yesterday in its online edition.
Suggested moral of the story: When it comes time for Dave Harmer (or any of Boss Godfrey's cronies) to resort to expressing irrational optimism, it's also time for the lumpencitizens to become extra nervous.
Write it down so you don't forget it, gentle readers. This is a lesson we'll no doubt need for the future, as the Godfrey administration's grand plots and schemes continue unravelling one by one.
Update 2/20/07 9:11 a.m. MT: The Standard-Examiner also provides a good writeup this morning, in which Scott Schwebke reports that Dave Harmer's mood has been downgraded from "optimistic" to "hopeful."

Adam Aircraft Closes its Doors

Airplane manufacturer appears one announcement short of calling it quits

It looks like it's curtains for Ogden Airport aircraft manufacturing tenant Adam Aircraft, according to this morning's Standard-Examiner story. Adam Aircraft, which has been under severe financial pressure for the past several months, now announces it has shut its doors, Business Page Ace Reporter Scott Schwebke reports:

OGDEN — Adam Aircraft Industries suspended operations Monday at its headquarters in Colorado, putting about 500 remaining employees out of work indefinitely.

The measure stemmed from Adam’s inability to come to terms with a lender for funding to maintain business operations, the company said in a prepared statement.Although the most recent company press statement falls short of announcing the full liquidation threatened earlier in the month, press spokeswoman Shelly Simi also hints at followup announcements later in the week. The company is still evidently holding off the inevitable, hoping and praying for the appearance of an investor "white knight."

Upon hearing the latest news on Adam's plight, Ace Reporter Schwebke apparently speed-dialed his buddy Dave Harmer, for the latest visionary wisdom on Adam Aircraft's apparent demise:

Dave Harmer, the city’s community and economic development director, said he remains hopeful that Adam will find new funding partners to allow production of the A500 and A700 to resume.

“I’m still hopeful they will continue and that the aircraft plan is a good plan and will survive,” he said.

Hope springs eternal in Emerald City, aka Prozac City.

We're going to go out on a limb however, and predict that its "all over but the shouting" for erstwhile Ogden airport tenant Adam Aircraft.

What a shame. That model A500 in the photo at the header of today's Std-Ex story appears to be one sweet bird*.
Comments, anyone?

*airplane jargon

Adam Aircraft Ain't Sayin 'Nuttin" About Rescue Refinancing

One of the key tenants at the Ogden Airport still won't disclose whether they're broke or not

Adam Aircraft is once again front page news in the Standard-Examiner business section this afternoon,(strangely enough) with a fine Scott Schwebke story, neatly summarizing the current situation with the financially-plagued Ogden Airport airplane manufacturer. Even more strangely however, the major news of the day is that there is no news on the results of Adam's eleventh hour efforts to obtain $30.5 milllion in new operating capital by the end of January. The Std-Ex headline says all: "Adam Aircraft mum on quest for cash." Here's today's story lead:

OGDEN — Adam Aircraft Industries plans to disclose later this week its progress in raising $30.5 million to keep the company operational.

Shelly Simi, a spokeswoman for Adam, declined Monday to say whether the company had met its self-imposed deadline for obtaining the funding by the end of January.

Our take on this? Adam officials would be crowing now, if they'd successfully obtained the new financing. The plain fact that they're NOT doing that doesn't bode well [sigh].

We'll also remind our readers that Ace Reporter Schwebke doesn't tell us whether he obtained this information by actually interviewing Ms. Simi, or whether he googled (at long last) and got his info from one of the several articles on the net like this. Gawd knows the Std-Ex is loathe to admit that it ever lifted an element of story from lowly WCF.

Interestingly, our favorite Std-Ex Ace Reporter finally tangentially mentions that the founder and heretofore CEO of Adam Aircraft mysteriously left Adam in August, just as we reported earlier here.

As an added bonus for today we link this article from USA Today, published a little less than a year ago, touting the founder an then CEO Rick Adam. Here is that article's information on the company founder (article loads slowly). Hard to believe a smart guy with such a track record of building succesful companies might have been forced out by the Adam Board of Directors for a lack of business acumen, as some on WCF have suggested.

We're still wondering how it could be that the company founder, who led the company from its founding in 1998, could have fled his company in August 2007.

As to Ace Reporter Schwebke's latest article we'll also say this: Last week, gentle reader Curmudgeon suggested thusly (paraphrasing): "The Adam Aircraft story belongs on the "business page."

And lo and behold; there it is today! Kudos the the Std-Ex for finally taking WCF advice; and congratulations to Ace Reporter Schwebke for morphing into a Std-Ex business page contributor.

We're always here to help.

More Adam Aircraft Troubles

Plane Manufacturer Owes City For Lack Of Jobs

From yesterday's article on manufacturing.net:

PUEBLO, Colo. (AP) — The city is seeking to reclaim $2.37 million in incentives to Adam Aircraft, which fell short of promises to provide 448 local jobs for seven years.

Layoffs wiped out most of its local work force.

The privately owned aircraft developer said last month that it laid off 170 employees in Centennial, 80 in Pueblo and 50 in Ogden, Utah. Its plant in Pueblo was manufacturing tail sections for planes.

The company was given three years to create the jobs in Pueblo before facing potential fees for missing the target. The ramp-up period ended Feb. 6, 2006. Adam Aircraft could get credit for employing between 80 and 90 people, though, City Manager David Galli said.

The city was waiting for an official head count from the company before deciding how much to seek in repayment.

"Our goal now is to make sure we protect the city's investment and we're prepared to do whatever we need to do to get the taxpayers' money back," Galli said.

The city had made $3 million available to the company from collections of a half-cent sales tax for economic development, based on Adam's promise that it would provide 448 employees for seven years or pay for the shortfall every quarter, Galli said.

Of the $3 million, about $2.37 million was spent on a building and equipment to lure the company to town. Galli said the city owns the building and has placed liens on equipment Adam purchased with the money.

Query: How much, exactly, is Ogden City out of pocket to lure Adam Aircraft to town?

And can we see by a show of hands just how many of our gentle readers believe that Adam Aircraft will be re-hiring its laid-off Ogden employees in the spring?

So many questions; so few answers.

More Strange Tales Re Floundering Aircraft Manufacturer Adam Aircraft

The company's founder and CEO jumped ship in August

Over the past two weeks, Weber County Forum has devoted a fair amount of electronic ink to the travails of Adam Aircraft, the Ogden Airport's key manufacturing tenant, from the company's announced layoffs on January 17, to Wednesday's revelation that the company had warned stockholders that the company might be two short days from possible liquidation.

We now learn this morning from the Denver Post that Rick Adam, the company's founder and CEO, left the company in August, to to pursue "his next entrepreneurial venture." The article does not tell us whether Mr. Adam retains any financial interest in Adam Aircraft, or whether he instead disposed of such interests (sold his stock) prior to his departure, and before it had become publicly apparent that his company was in deep financial doo-doo.

Hmmmm....

It never ceases to amaze us what we stumble upon whilst googling.

Comments, anyone?

The Standard-Examiner Plays Catch-up

Our hometown newspaper's new motto: The news -- better late than never

The Standard-Examiner is johnny-on-the-spot this morning, with an Ace Reporter Schwebke article describing Adam Aircraft's stockholder warning letter, a story we broke here on Weber County Forum two days ago.

Rather than suffer the indignity of acknowledging lowly WCF as his source, however, Mr. Schwebke dredged up this Wichita Eagle article from January 22, 2008 instead.

Alas, the Std-Ex continues to pretend WCF doesn't even exist -- except on those rare occasions when our home town newspaper slings mud. Doesn't the Std-Ex realize that WCF truly wants to be its best buddy?

We don't mind being ignored, however. It's OK if we remain the Mr. Schwebke's secret behind the scenes scource. The important thing is that the Std-Ex has now informed its general readership that Adam Aircraft's financial circumstances are considerably more dire than the Std-Ex originally reported.

Adam Aircraft's next drop dead date? Tomorrow, the Std-Ex reports.

All kidding aside, our favorite Ace Reporter did some additional sleuthing on this story. We were relieved to learn, for instance, that the State of Utah has not yet advanced any money to the Adams Aircraft venture. And while we were not at all surprised that Emerald City Economic Development Department Head Honcho Dave Harmer remains entirely unflustered by the latest Adams Aircraft developments, we do wish Mr. Schwebke had found out what Mr. Harmer has been smoking, and told us how we can get our hands of some of that too.

All in all a well written story. We recommend that our readers give it a read.

Update 1/30/08 12:55 p.m. MT: Subsequent googling has revealed an article which seems to put a finger on Adam Aircraft's current problem. According to the online journal Jets' RU, the end of month deadline stems from the demands of senior lenders, who've demanded full payment of $30.5 million in loans by January 31. It seems obvious to us that Adam probably has some "wiggle room" time-wise, unless the debt instruments provide for immediate surrender of Adam's assets in the event of default. Time will tell, we suppose.

And to all of those who've accused Emerald City officials of failing to do due diligence with respect to this financially pressed aircraft manufacturer, the article supplies this interesting paragraph:

On Jan. 18, three days after Wolf sent a letter to company shareholders, Headline Industry News reported that Adam laid off more than a third of its workforce. Nine days earlier on Jan. 9, the company said it was focusing its resources on its VLJ, to obtain type certification. The company insisted it was on "target for certification of the A700 in 2008." The company never let on how dismal its financial situation was.

In all fairness, it's tough to properly vet a company when they're playing it so close to the vest.

Comments, anyone?

We're a Couple of Shaky Deals From Liquidation, Adam Aircraft Warns Its Stockholders

Boss Godfrey's Adam Aircraft puts out the tin cup to avoid liquidation

Cash flow crippled Adam Aircraft gives the bad news to its shareholders: "We're two deals away from liquidation," and Adam Aircraft investors might not get their investments back.

We hope Boss Godfrey and his cadre of empty suits can reassure the lumpencitizens about this.

For the time being, we of Emerald City and the State of Utah, who have pledged millions in monies to Adam Aircraft, for the construction of Adam Aircraft's possibly to be abandoned custom-designed manufacturing facility are, well...

Keeping our fingers crossed, shall we say...

Adam Aircraft Update

Boundless optimism faces off with a tight credit market

Several more articles in this morning's news, concerning Adam Aircraft's financial travails, which we discussed at some length in yesterday's article.

First, The New Mexico Business Weekly reports that Adam has laid off 300 employees companywide (40% of Adams' workforce) "...due to lack of financing, forcing the company to seek additional capital to continue producing its carbon composite airplanes. "

And it isn't "chump change" the company is reportedly seeking:

We're looking [for] anywhere from $75 [million] to $100 million," said Shelly Simi, Adam Aircraft spokeswoman, noting that the Centennial-based company is working with Citibank to acquire funds.

Adam Aircraft President Duncan Koerbel issued a statement that said, "To provide for our future growth, we must be strategic in our focus by managing current cash expenditures to ensure adequate time to secure financing for the long term. We're off to a good start in this effort with 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."

Incidentally, the same article reports that Adam Aircraft has apparently run through very substantial amounts of investment capital since only August of 2006:

In August 2006, Adam Aircraft raised $93 million, led by Menlo Park, Calif.-based venture capital firm DMC. Also, Meisrow Financial, W Capital Partners, D.E. Shaw Laminar Portfolios LLC and Acadia Woods Partners helped raise that money.

What's more, the Rocky Mountain News reports Adam's cash flow problems aren't confined to Adam alone:

Adam's announcement comes just weeks after another Colorado startup aircraft manufacturer suspended development of its jets and laid off almost all of its workers because it was unable to secure financing.

That company, Arapahoe County-based Aviation Technology Group, has kept a skeleton staff aboard as it explores options, which could include selling the business or closing down completely.

Further, Adam's prospects of raising additional capital reportedly don't appear to be bright, according to aviation industry insiders:

A growing credit crunch nationwide likely is affecting both Adam Aircraft and Aviation Technology Group, observers say. Investors and lenders are becoming more cautious in the face of a possible recession, meaning less money is available. Adam Aircraft said it'll likely take longer to secure financing, so it must prepare for that by paring costs.

"Very few industries are going to be immune to the credit crunch," said Henry Harteveldt, a travel analyst at Forrester Research. "You can bet that an industry whose foundations are based on transporting people using high-cost oil is likely to get a chilly response in the banking business."

Adding insult to injury, the RMN article also speaks of an additional 2007 cash investment, not mentioned in the NMBW article:

In June it (Adams) announced a $105 million infusion of cash from a group led by Morgan Stanley Senior Funding, coming on top of tens of millions more it landed in recent years.

Goldman Sachs and Hunt Growth Capital -- previous investors in Adam Aircraft -- participated in that funding.

Simi said none of the Adam Aircraft investors have halted financing.

What seems clear is that Adam Aircraft has been borrowing money hand over fist over the past two years, but that the company is once again on the verge of being fully "tapped out." And this is just speculation on our part, but we think that it's likely that most of Adam's earlier investors might be growing a mite worried about recovering their original investments.

Meanwhile, back in the "visionary" world of Boss Godfrey and his ever-optimistic henchmen on the ninth floor of the Emerald City Municipal Building, everything is business as usual, according to this morning's Standard-Examiner story, from which we incorporate the following text:

Dave Harmer, community and economic development director for Ogden, said he wasn't surprised to hear of Adam's temporary layoffs.

"They're going through another round of financing, and credit markets are very tight now," he said.

"I really expect this will be a short-term negative impact, and then they'll [be] back and everything will go forward as planned."

We suppose we'll have to wait until summer to find out whether boundless optimism trumps the reality of the sagging credit market.

Adam Aircraft Suspends Operations

Millions in corporate welfare are seemingly insufficient to keep Adam's Hinkley Field doors open

By Curmudgeon

I imagine the news this morning that Adam Aircraft has shut down manufacturing operations in Ogden and is laying off its workforce is going to produce a fair number of "we told you so" posts, and probably some downright crowing in these parts.

Before that starts, I think it's worth remembering that this is not good news for Ogden and that a significant number of our neighbors are now without income, or much. The company, what's left of it, is being very close-mouthed about the long-term implications of the move, though a company spokesperson does concede "this is not good." Let's hope the delayed FAA certification of their new model [which seems to be the reason for the shut-down, or so the company says] gets straightened out and operations can begin again some months down the road.

That said, the shut down does raise some questions about the business judgment of both Utah state and Ogden city development officials, who recently approved millions of dollars in financial incentives to lure Adam Aircraft into expanding its manufacturing operations in Ogden.

And what say our gentle readers about all this?

Update 1/17/08 11:24 a.m. MT: More on this story from the Denver Post. It appears that Adam's problems are even more serious than the Standard-Examiner reported.