Tuesday, May 19, 2009

Eclipse Aerospace, the 'new' EAC?

Clearly efforts to attract funds continue apace, since any investor in this troubled sector requires proof (in the form of cash) that the owners will support the 'new' company. So, Mike Press is asking, politely, for $100,000 as evidence that his effort merits more funding than that of say, the EOG. Several parts of the communiqué below intrigue me, in particular the offer to purchase existing aircraft. If, as I suspect, this refers to the ex DayJet fleet I'm surprised that attention is being drawn to it in this way. After all, one of the key issues in restarting anything is how much revenue is possible from the current fleet. And we all have our opinions as to how many E500's are actually flying...

Anyway, read it, in full, and try and work out what Mike and his merry crew are up to. Whatever happens on the 24th of June, I wish each and every one of the bidders the very best.

Shane


TO: ALL ECLIPSE 500 OWNERS AND DEPOSITORS
FROM: MIKE PRESS (S/N 4) AND MASON HOLLAND (S/N 473)

Our last communiqué was on April 24, 2009. We would like to take this opportunity to give you an update on the status of our progress since that date. We have a lot of exciting news to cover in this document.

We would also like to present our offer to owners of current aircraft serial numbers 1-260, as well as our process for performing upgrades beginning on or about July 1, 2009. (Note: This communiqué discusses the service, support and modifications to be performed in the United States. We are still in discussions with our European partners and will provide an update on Europe in the near future.)

Current Status of Asset Acquisition
We are pleased to announce that we are now in the process of finalizing the legal documents required for the acquisition of the assets of Eclipse Aviation Corporation. Many of you have heard that there is a proposed sale date of the Eclipse assets on June 24, 2009. This sale assumes that a qualified bidder (such as ourselves) submits a properly drafted Asset Purchase Agreement (APA) and it is accepted through a short auction process managed by the bankruptcy trustee.

Based on our current estimates, we have the investment funds committed not only for the purchase of the assets but also for working capital to get the company restarted. Of course this is an estimate depending on whether there are any other bidders and how high the bid for the assets goes. We believe that it is in the owners’ best interests that only the strongest bidder is at the table so the balance of the investment raise that is not used for the acquisition could be applied to working capital. Therefore, by the June 24th closing date, we feel confident that if we are awarded the assets, we will be fully funded and ready to resume operations of the company.

In going through the legal paperwork, we have settled on a permanent name for our company moving forward. From this point forward, we will now be known as Eclipse Aerospace. Eclipse Aerospace will have two primary divisions, which include the production arm of Eclipse Aviation and a separate and distinct division, Eclipse Service Network, which will operate and manage the network of company owned and third-party service centers.

Progress On Modifications
FIKI Modification- We are excited to announce that we have received FAA approval to begin FIKI modifications immediately, regardless of whether we obtain the assets of Eclipse Aviation Corporation. Therefore, we are ready to start performing these modifications immediately in our Chicago ESN Service Center.

1.5 Modification- Immediately upon obtaining the assets of Eclipse Aviation Corporation, we will also be able to begin the 1.5 upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

AvioNG Modification- Immediately upon obtaining the assets of Eclipse, we will also be able to begin the NG upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

ETT Modification- We are in negotiations with third party vendors who will be able to perform the major airframe modifications for these aircraft. This will allow our company resources to focus on other modifications and aircraft refurbishments. It will also allow us to begin the ETT modifications earlier, and in parallel, with the other modifications.

Aircraft Buy Back and Refurbishment Program
We have a number of owners who wish to sell their airplanes to our new company. We are negotiating terms with each of these owners on an individual basis. As we take possession of these aircraft, we will update the aircraft to full functionality, refurbish the paint and interior as needed, perform a full inspection, and make them available as Eclipse pre-owned aircraft complete with a warranty from the factory. These highly desirable aircraft will be offered first to deposit holders of the past company at substantial savings over a new production aircraft.

Offer presented to Owners of serial numbers 1-260
We have been in discussions with the Eclipse Owners Group Steering Committee (EOG), and proposed numerous ways we could work together in a future endeavor. Unfortunately, all of our suggestions have been rejected, and there have been no counter proposals from the EOG. Therefore, we would like to reach out to each owner and extend the following offer:

We are now taking deposits for modifications of aircraft. For each aircraft owner that submits a
refundable deposit to our escrow account prior to the deadline, (to be used solely as a credit towards the completion of modifications and service), the owner will receive:

• Priority Service – We will schedule upgrades for FIKI, AVIO NG, and NG 1.5,
beginning immediately, in the order in which the forms and deposits are received.
FIKI modifications will begin at ESN’s Chicago facility on June 1, 2009.

• Discount – Each aircraft owner who places a deposit prior to the deadline will receive
a 20% discount off of the retail price of all parts for the modifications. We have not
established a retail price for the upgrades yet, but we have stated in previous
communications that we will set a reasonable retail price based on industry standard
markups.

• License to Assets – Each aircraft owner who places a deposit prior to the deadline
will receive a royalty-free, perpetual license for the components of the type certificate
and intellectual property needed to provide service and upgrades to their aircraft on
an ongoing basis should our effort fail in the future. This license will remain in full
force and effect at the cost of our company until such time as the fleet reaches a total
size of 750 aircraft, at which time the license will expire.

The deposit amount is $100,000 regardless of what upgrade is needed. All deposits will be placed in a third party escrow account and are fully refundable until and unless we win the Eclipse assets. The deposits will be used to secure your place in line for modifications only. Once we have established the final price for the modification, you will be presented with a quote, and upon your acceptance of the quote and no more than 60 days prior to your scheduled modification date, your deposit will become nonrefundable and used to order parts as well as provide working capital for the modification effort. This offer is open up to May 31, 2009, which is the deposit deadline.

If you would like to place your deposit and be placed in the scheduling queue, please contact Ken Ross or Cary Winter of our ESN team to request the deposit form. The contact information is listed below.

Summary
Our Eclipse Aerospace team stands committed from day one to provide a “Customer First” experience in restarting Eclipse Aviation, immediately offering service and upgrades, and eventually restarting production of the Eclipse 500 over the course of the next several years. Our business plan has been very clearly defined, our financials are in order, and members of our team are receiving great acceptance and co-operational spirit in dealing with the appropriate departments within the FAA and other regulatory bodies.

In addition, our team is in communication with all the major suppliers, and we are planning a supplier summit to be held in early June in Albuquerque. At that time we will begin a major effort to reestablish parts inventory and make parts available to owners on the most cost effective basis possible.

This cooperative effort of our investment group, the current owners of Eclipse Aircraft, suppliers, and future owners of Eclipse aircraft has been fantastic. We appreciate everyone’s participation, and we hope that within the next several weeks, we will be able to see a positive end to this part of the process that will keep your aircraft in service and ultimately bring the Eclipse back into production.

Should you have any questions about how the upgrades will be performed and in what order, or if you wish to secure your position for upgrades, please do not hesitate to contact members of our ESN team, Ken Ross and Cary Winter, using the following contact information. If you have any questions about investment opportunities, the structure of our company, or the escrow account for the deposits, please feel free to contact Mason Holland or Mike Press using the contact information below.

We look forward to working with you.

In order to schedule your modification and request a deposit form please contact:
Ken Ross: phone- (847) 325-1180 or e mail- ross@eclipseservicenetwork.com
Cary Winter: phone- (847) 325-1177 or e mail- winter@eclipseservicenetwork.com

For all other questions or comments please contact:
Mason Holland: mason.holland@eclipseaerospace.net
Mike Press: mike.press@eclipseaerospace.net


Questions and Answers about this Communiqué

How safe is my money if it is not in escrow and you're using it for
day-to-day operations?

The dollars on deposit for modifications will remain in an escrow account until the official sale of the company. If Eclipse Aerospace wins the bid, these deposits (only with your approval of the quoted price and in no event prior to 60 days before your scheduled modification) will then be released in order to obtain parts from suppliers and to staff and re tool the Service Centers. In the alternative, you may request a refund.

Isn't this what happened with Eclipse? What's to stop you from using the deposit money and never providing my upgrade?
No, old Eclipse did not use escrow accounts and did use deposits for working capital as they were collected. We are funding an escrow account and will not release your funds from the account until you have approved the final price for the upgrades and have a scheduled date for your modifications no more than 60 days out.

Why even collect the deposits now if they are refundable?
It is important to our investor group to ascertain the true need for establishing a separate holding company which will provide the perpetual license for the TC and IP on an individual basis. Therefore, we are making this offer as part of the purchase of the assets of Eclipse. Those who feel this is an important value point for them should strongly consider this offer and participate.

In addition, we are also trying to quantify the demand for the upgrades and plan accordingly for them during our first 6-12 months of operations. One of our main goals from day one is to get aircraft 1- 260 fully conforming including all modifications as soon as possible.


What are the details of the license to the assets?
Simultaneously with or shortly after the purchase of the assets from the Trustee, Eclipse Aerospace intends to place the Type Certificate and certain intellectual property into a separate holding company (separate and distinct from the assets of Eclipse Aerospace). Each aircraft owner who has made the deposit for modifications prior to May 31, 2009 will be issued a royalty-free, perpetual license for the components of the type certificate and intellectual property needed to provide service and upgrades to their aircraft on an ongoing basis should our effort fail in the future. In addition, this license will transferable with the aircraft when and if it is ever sold.

What if I do not send in a deposit by May 31?
You will still receive service and we have no intent of charging service access fees. You will simply be charged our retail pricing (not eligible for the discounts above), your place in line for modifications will be scheduled after those who had placed deposits for the deadline, and you would not receive the royalty free perpetual license for your aircraft.

213 comments:

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gadfly said...

So, I looked at the “odometer”, and it said, “200" . . . so this comment will come up on the next page, and my comments about the “cow”, and “meditate”, and “chew the cud” are a page back. But maybe you can go back to get the drift of thought.

And I’ll continue:

The subject was “Selah” and “meditate” and “chewing the cud”. If you just dropped in from outer space, you’ll need to go back on your own, to pick up the thread. This website is suppose to be about the Eclipse “Very Light Jet” . . . and of late, you’d be hard put to discern that . . . and, if you wish (or don’t wish), the Eclipse E500 is (was) an attempt to become a most friendly and widely used (and purchased) jet aircraft, with immense market success . . . etc., etc., ad nauseum. It didn’t happen.

Had the general aviation world been more honest, and “up front”, we would not now be turning the page, and discussing this thing during the final stages of rigor mortis. And like all dying things, frankly, it “stinks” . . . real bad.

There are a few, who continue to claim that there is “life” in there, somewhere. I would maintain, that the life you might imagine is a swarm of flies, and a rather ripe colony of maggots (second generation, for those of you who may be familiar with such things . . . and not a good sign, to say the least).

That’s it, for now!

gadfly

(Oh, for those of you who are curious about “chewing the cud”, and such things: A couple years ago, my wife and I attended the annual “Ranch Day”, in Southern New Mexico (Catron County) . . . and among the things shown, was a cow, with a “hole” in her side. She was a happy cow . . . chewing the cud, and pregnant with a calf. My wife, an RN, put on a plastic glove, and reached deep within the side of the cow, and was able to feel the unborn calf, and feel within one of the four stomachs, what the happy cow had been eating. I watched from a distance . . . satisfied to video the event . . . and watch on the video screen the events taking place, by way of microscope, within the cow’s stomach. I learned that those little critters, on the monitor, were breaking down the dry grass, into basic sugars . . . and when they lived out their 24 to 36 hour life spans, they supplied protein for the cow. Up until then, I had the belief that grass supplied food for cows. In a round about way, maybe that’s true . . . but grass by itself does not supply the food. God has a unique system, that deserves close attention.

As with Eclipse, the simplistic answers don’t cut it. And maybe that is much of the problem, as many attempt to come up with simple answers, to complex problems.

gadfly

Dave Ivedorne said...

It looks like Cirrus is rehiring most of those laid off last year.

A bit off-topic, but a bit of sunshine for an industry that's had more than its share of doom & gloom of late.

DI

gadfly said...

Back at Moody, they said a “prayer” should always be served with “lettuce” . . . as in “Let us pray!”. Well, this is not a prayer, but rather a suggestion . . . let us consider the opportunity availed to us by first, Stan, and then Shane, to discuss many subjects, under the umbrella of General Aviation, and specifically, the little “Eclipse”.

Of late, we’ve gone far afield from the original theme . . . and that’s not all bad, but puts a certain pressure on our “hosts”, that may not be fair.

It is under no expectation that admonitions will be followed, but the gadfly would like to suggest that at least an attempt would be put forth, to connect the discussion with the little jet, that “thought it could”, but didn’t.

There is a wealth of things that could be learned from the demise of the little bird from ABQ . . . maybe we all know everything there is to know about the fiasco . . . but maybe there are some folks that could be educated by our collective knowledge of the recent history.

“Some”, who come in from time to time, were among those, to whom great promises were made, to “buy their time”, in exchange for “stock options”, etc. Maybe, these folks could share their experiences with others . . . that such things will not be repeated?

It’s easy to criticize . . . no talent/brains required. But maybe, there are positive suggestions . . . related experiences, that may provide wisdom to future generations.

Anyone can “go online” and criticize, but it takes effort to help improve a bad situation, and hopefully prevent a repeat.

gadfly

(“DI” is going in the right direction . . . and we need more of that encouragement.)

ColdWetMackarelofReality said...

Dave I, look for similar actions at Cessna and HBC and Gulfstream as well. The cuts were too deep too fast, knee jerk reactions to thuggery from the Congress and POTUS.

The same POTUS coincidentally who used two G5's and 3 helicopters to take his wife (and security detail of course) to a show on Broadway the day before he mandated the largest manufacturing bankruptcy hearing in the history of the US resulting in no less than 21,000 layoffs.

In essence, he spent one dollar on his date for each person laid off as a result of GM's forced BK - to go out for dinner and a show - in less than 4 hours.

Now that's empathy for all the little people out there who he is asking to 'sacrifice'.

Finally, someone to give Wedge a run for the money as best 'tool' on the planet - and he does it all with OPM too.

airsafetyman said...

"..for similar actions at Cessna and HBC and Gulfstream as well. The cuts were too deep too fast, knee jerk reactions to thuggery from the Congress and POTUS."

A few times through the TSA lines and a few trips on some of the sleazier commuters and majors by the CEOs should restore a great deal of the demand for corporate aircraft. I do look for anyone who can produce a twin-engine turboprop to make out fine, even in the present financial environment.

WhyTech said...

"Now that's empathy for all the little people out there who he is asking to 'sacrifice'."

Same thought occurred to me. He said "we all need to sacrifice," but he will be living large in the WH for 8 years with his fleet of 747's, G5's helicopters, limos, etc, etc, and then go on to book and movie deals in the $100mm to $200mm zone, if not more. Just what exactly is he sacrificing?

Dave Ivedorne said...

Same thought occurred to me. He said "we all need to sacrifice," but he will be living large in the WH...

Oh c'mon. He's CEO of the largest corporation on earth - by far. Name the last POTUS who didn't live like Caesar ( and Leslie Lynch King, Jr doesn't count ).

...he will be living large in the WH for 8 years...

You saw this too? ( It's the first thing that fell to mind upon reading your comment. Gotta sit through a commercial, but worth it if you like a laugh. )

DI

fred said...

yes , Julius ...


The AF447 is all over the current news ...

there was some 32 nationalities on board , From Rio to Paris , the biggest lost ever experienced by Air-France claiming the life of some 228 ,among them Brazilians(58) , french(61) , germans(26) , italians(9) , Chinese (9), Swiss (6),british (5) ,Lebanese (5),Hungarians(4) ,Norway (3), Slovakia (3),Irish (3), USA (2), Spain (2),Morocco (2),Poland (2), South-Africa (1), Argentina (1), Austria (1), Belgium (1), Canada (1), Croatia (1), Danemark (1), Estonia (1), Gambia (1), Island (1), Nederlands (1) , Philippines (1), Roumania (1), Russia (1), Sweden (1) et Turkey (1)

let's hope for the best when we board a plane ...

fred said...

Di ...

i know of one guy who , despite the fact of being one of the richest guy on earth, drive a normal car , change it only every 8 or 10 years when the previous one start to have too many problems ...

still eat at the same restaurant than many years ago , still for the same price and menu ...

doesn't live in a castle with a statue of himself in the entrance ...

never takes private-Jets (but possess Net-Jets) fly commercial because it's cheaper ...

doesn't change his wife every 3 or 4 years ...

talking about this , no wonder why he is one of the richest on earth !....

WhyTech said...

"Name the last POTUS who didn't live like Caesar "

An important part of effective leadership is setting appropriate examples. The current POTUS doesnt seem to get this. He behaves more like a kid in a candy store. If I were in his shoes, I'd be setting some very visible examples even if only symbolic, and certainly avoiding the wrong examples such as multi-million dollar "dates" at taxpayer expense. What is this guy thinking?

Shane Price said...

New post up.

The weather here is just too nice to be slaving over a hot keyboard, so I took a little longer than normal.

Hence the number of items covered, which should generate lively chatter...

Shane

michal said...

"Small size drove a lot of the decisions you claim had nothing to do with the failure of the plane..."

Cirrus, Diamond (Piper to an extent) and others are building even smaller jets. If they fail as well only because of the size then your position will be fully vindicated. We may have a communication problem as well - I am separating size alone from all the poor decisions that Eclipse made on its way to achieve the goal.

baron95 said...

Even the left, union cheerleaders know manufacruing jobs are not the goal....

From Robert Reich's (ex Clinton Labor sec

First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.


When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.

Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before.


Economists at Alliance Capital Management took a look at employment trends in twenty large economies and found that between 1995 and 2002--before the asset bubble and subsequent bust--twenty-two million manufacturing jobs disappeared. The United States wasn't even the biggest loser. We lost about 11% of our manufacturing jobs in that period, but the Japanese lost 16% of theirs. Even developing nations lost factory jobs: Brazil suffered a 20% decline, and China had a 15% drop.

What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. A century ago, almost 30% of adult Americans worked on a farm. Nowadays, fewer than 5% do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people. New technologies, more efficient machines, new methods of fertilizing, better systems of crop rotation, and efficiencies of large scale have all made farming much more productive.

Manufacturing is analogous. In America and elsewhere around the world, it's a success. Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30%.

We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered or clamped what went by. Those days are over. And stop blaming poor nations whose workers get very low wages. Of course their wages are low; these nations are poor. They can become more prosperous only by exporting to rich nations. When America blocks their exports by erecting tariffs and subsidizing our domestic industries, we prevent them from doing better. Helping poorer nations become more prosperous is not only in the interest of humanity but also wise because it lessens global instability.

Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task.

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