Eclipse asks for early release of Escrow

They'll hold your 50%/$625,000 in escrow until enough potential owners go for it, at which point they'll all be creditors for the $625,000 in the bankruptcy proceedings and get 10 cents on the dollar.

In the meantime those investors can watch Diamond and Cirrus ship actual VLJ aircraft.
 
Didn't this aircraft enter the mock buildup phase about six years ago? I'm sensing a lag in production.
 
KennyFlys said:
Didn't this aircraft enter the mock buildup phase about six years ago? I'm sensing a lag in production.
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They've shipped a handful of Eclipse 500s. They won't say how many. About 15.
 
Ya know, I feel kinda bad for Eclipse. It seems to me that someone always has to be the first to take the big risk to get a change started, and that someone usually doesn't reap the rewards. Think of Beechcraft and the Starship. Think of all the folks who jumped onto the VLJ movement only AFTER Eclipse got the market started - I bet the Cessna Mustang will be the only successful one for a while. Think of all the LSA makers who were finally "vindicated" (and some will go belly-up) when Cessna joined the market.

With any sort of major change, someone has to go first, and make all the mistakes, so the followers can do a better job. The key thing to remember about revolutionaries is they are usually shot once the revolution is successful.

Cirrus is the only "change agent" aviation company that seems to have had long term success after being an innovator, and they had some scary moments along the way - but I think they planned for those moments from the beginning.
 
TMetzinger said:
Ya know, I feel kinda bad for Eclipse. It seems to me that someone always has to be the first to take the big risk to get a change started, and that someone usually doesn't reap the rewards. Think of Beechcraft and the Starship. Think of all the folks who jumped onto the VLJ movement only AFTER Eclipse got the market started - I bet the Cessna Mustang will be the only successful one for a while. Think of all the LSA makers who were finally "vindicated" (and some will go belly-up) when Cessna joined the market.

With any sort of major change, someone has to go first, and make all the mistakes, so the followers can do a better job. The key thing to remember about revolutionaries is they are usually shot once the revolution is successful.

Cirrus is the only "change agent" aviation company that seems to have had long term success after being an innovator, and they had some scary moments along the way - but I think they planned for those moments from the beginning.
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While Eclipse may be one of, if not the first, to make a jump toward VLJs, it seems they did it with far too many blind efforts. Cessna has been making small jets for decades with amazing success, much more than the originator of the small business jet. Although, I do wish Bill Lear would have improved the 8-track so it would still be around. :)

While Eclipse may have started off with a good idea, they had so many design and engineering changes over the years it has cost them in terms of reputation and reliability as opposed to establishing them a leader in a new sub-sector of business jet production. They started with some very bad business hype such as the first business jet to be under a million bucks. Then it's underpowered engines, something pilots of such birds take rather seriously. Between potential buyers and potential operators, questions came faster than answers and that continues to be the case.

Perhaps the difference with Cirrus being the innovator, primarily in construction as well as use of BRS chutes, is they began with considerations that didn't appear to be "behind the airplane" so to speak in its design considerations. I don't recall any issues with the airplane being underpowered but I also don't think potential buyers are as concerned for changes in piston power as they are with turbine power. That may be more psychological but it's a real effect on the marketing efforts.

I don't know where Eclipse's early engineers originated but I'm convinced they wouldn't be in as much of a pickle had they spent some cash on stealing away a few key folks from the likes of Cessna or Raytheon.

I also think they are a bit more than top-heavy in leadership, a major reason for financial hemorrhaging.
 
>From Eclipse to their customers: Of course, those of you that released your escrow already know this <g>).

Three weeks ago, we announced a special offer to lock in your standard aircraft price at $1.25M USD in exchange for $625,000 in escrow by December 14th. The offer required participation from enough customers for us to raise a minimum of $30M USD before we could access the funds.

I am very pleased to report that we have reached our goal of $30M. At this point, and in accordance with the Escrow Agreement, Eclipse will have the option to draw upon these funds as needed.
For those of you who participated, you will receive executed agreements to confirm your new price by December 21, 2007. If you have questions about your transaction please contact Michael Gelpi at XXX-XXX-XXXX or at _XXXXXXXX.com_
(mailto:Michael.gelpi@eclipseaviation.com) .


Best,

Dave
 
I don't suppose they'll release documentation on exactly how this money will be use or has been used?
 
KennyFlys said:
I don't suppose they'll release documentation on exactly how this money will be use or has been used?
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Curing defaults under credit facility covenants, my guess. Buying time.

I fervently hope that they can reasonably resolve their issues on this aircraft, but they need to really drop back, identify the issues, and address them in an aggressive and proactive manner.
 
Amazing. Could there be a more risky investment? I don't think so.

I don't feel sorry for Vern Raburn. I think he disrespected many realities of the airplane design and manufacturing business. I would like to know how many millions he has in the venture personally ... and how much he is pulling out.

Wouldn't it be a heck of a slap in the face if they took the $30m, gave out big bonuses and started looking for a buyer for the bankrupt company.

I'd take that $625k and spend it on a Royal Turbine Duke:)

Mike
 
There is a thing called 'vested interest'. Kinna like having a lot of money in a pot playing poker. One feels the need to protect what they have in the pot. In this case, there are a lot of folks that have ordered the jet and seem determined to help make it happen. They may have access to information we outsiders don't. I hope it's good info. I never could get comfortable enough to put up the escrow to begin with. Thought I'd just wait to see how it all worked out. I'd really like to see them succeed, but take enough risk in my own business where I feel I'm an expert. Don't feel comfortable with a new group doing a new product with new technology using my money <g>

Best,

Dave
 
We can get the paperwork ready by putting those names on list of creditors in the bankruptcy court filing.
 
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flyersfan31 said:
Who didn't see that coming? I'm surprised they've made as far as they have.
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And with two seats, the Javelin is more like a $3 million toy than personal transport. However, Eclipse has blown through ~$1.2 BILLION to deliver around 80 airplanes that are not yet really finished, AND they lose money on every airplane they deliver that was sold during the initial wave of low-price sales.

What gets me about Eclipse is that they have this habit of asking depositors for more cash right before announcing major program changes. They asked for a progress payment just before changing engines. They asked for a progress payment just before kicking out Avidyne in favor of NG -- and said NG had been in the works for months. And now this. If history repeats, expect bad news shortly. The delays in getting the IOUs taken care of aside, this is a lousy business practice IMO.
 
Ken, is there anything published with regard to their financing and expense? Or, is the $1.2B an estimation from occasional disclosure?
 
KennyFlys said:
Ken, is there anything published with regard to their financing and expense? Or, is the $1.2B an estimation from occasional disclosure?
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The occasional disclosures have come from documents relating to New Mexico's financial incentive packages. And then when they DO get financing they'll say they closed on $X00 million. But no complete financial statements have been issued, so that $1.2 is a guess. Lots of other folks are saying $1.3, but what's a hundred million among friends? I try to speculate on the conservative side.

The rumor mill has been full of talk that a debt payment due Dec 15 would have forced them into Ch 11 had not the depositors forked over the non-restricted funds by Dec 14. Whether that's true I have no idea. Eclipse had always issued press releases over everything, but for the past couple months (since NBAA) they've been very, very quiet.

The problems as I see them are:

1) lots of people signed up for airplanes at prices that give the company little or no profit now. Lose money on every one and make it up in volume?

2) DayJet has taken off slowly, and it was Eclipse's biggest customer by far. In its registration paperwork, Eclipse appears to be skipping blocks of serial numbers, which may be options Day Jet is refusing.

3) Not many new sales at sustainable prices because there are so many positions for sale. Someone recently counted 60 on the market, with premiums ranging from $600K to $0.

4) Huge burn rate without commensurate deliveries means a cash flow crunch at best.

The problems with the airplane are well known, but there seem to be some management issues there as well.
 
I'm betting there isn't a whole lot of "sweat equity" among the senior executives and engineers making this happen. But rather, senior management is probably living well off the investment proceeds.

While I'd like to see the concept succeed and later improve, I honestly don't believe it will happen. I fully expect them to sell out, merge or go under in the next twenty-four months.
 
KennyFlys said:
While I'd like to see the concept succeed and later improve, I honestly don't believe it will happen. I fully expect them to sell out, merge or go under in the next twenty-four months.
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I think that for Vern & Co. to make Eclipse work as a company, at a minimum Avio NG will have to get certified very soon AND work as advertised, the ice trials have to have no surprises -- like ice coming off the wing and being ingested by the engines, and service reliability will have to be very good. That's a lot to ask. Add in the known issues with the windows and tires, and it's very much a roll of the dice.

I think what may happen is, depending on how many jets they can deliver, the company may go Ch 11, be bought for pennies on the dollar, and then THAT owner might make some money. As it is, amortizing the huge dollar investment leads to a very long payoff timeline, even if the company can outproduce/outsell everyone else as they forecast.
 
Orphan Aircraft. As in, Gates told Vern no more $$s. Make it fly on its own. Sigh.
 
bbchien said:
Orphan Aircraft. As in, Gates told Vern no more $$s. Make it fly on its own. Sigh.
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I gather Bill Gates was once upon a time, an investor? Who, has most likely considered his money a write-off waiting to see which year he can claim it?
 
I actually think that it is possible for eclipse to make it.

With the certification of Avio NG they have covered a huge hurtle, and are in really new territory.

I know that there are those who suggest that the Eclipse is underpowered, but it generally seems to be a pretty decent platform.

I really hate the fact that "new thinking" in aviation almost always leads to bankruptcy.

That having been said, Eclipse has a lot of momentum, that doesn't mean that they don't need to be profitable, but look at the fact that they raised $30M in just a couple weeks from their customers. A lot of people want the plane to succeed enough that they are willing to no interest loan the company money.

If they buckle down and get their production line moving, I think that eclipse can make this work.

Oh, and I am really, really jealous of the Avio system. It is a beautiful system whose time has come. I think that they will be vindicated in ditching the Avidyne for the Avio once the systems are in the wild.

~ Christopher
 
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