AAI Acquisition Launches Search For 'Strategic Partner'
Says Initial Efforts To Market Composites Expertise Have Been Successful
AAI Acquisition, Inc. (AAIA) announced Sunday it is seeking a strategic partner to breathe new life into the fledgling company.
As ANN reported, AAIA purchased the assets of the former Adam Aircraft in April 2008, and announced its intent to continue with certification of the A700 light jet at Oshkosh... but things took a tumble for the Russian-backed investment concern soon after, as declining economic conditions hit the venture capital markets hard.
In late October, AAIA chief Jack Braly announced what the company termed a "strategic realignment," halting further development and certification work on the stillborn A700 and laying off most of its workforce. AAIA subsequently launched an effort to market its engineering expertise to other companies, in order to stay in business.
Steve Patrick, Vice President of Business Development, said this weekend that AAI has been successful in that effort... and is now ready to expand through new investment.
"As we continue to develop this aspect of AAIA," Patrick said, "it is now appropriate to seek new investment partners. Based on our initial efforts, we are building a viable business base for our engineering solutions and services while retaining the option to re-launch the A700 business jet."
AAIA's portfolio includes aerospace design capabilities spanning composite applications to avionics/electrical STC support to rapid reaction fabrication capability.
Principal targets for that initiative include the aerospace and custom automotive sectors, as well as organizations that could benefit from the application of cutting edge composite design and manufacturing skills using low cost, out-of-autoclave methods that AAIA says were perfected while developing the A700 business jet.
AAI Acquisition On The Ropes Due To Economic Slump
Investment Capital "Pared Down" On Fall Of Russian Stocks
ANN REALTIME REPORTING 10.29.08 1600 EDT: Aero-News has been chasing down numerous News-Spy tips over the past 18 hours, stating Englewood, CO-based AAI Acquisition Inc. -- which purchased the assets of the former Adam Aircraft out of bankruptcy earlier this year -- shut its doors Monday and laid off workers. Calls to AAI headquarters and personnel for information have gone unanswered.
ANN has since confirmed the company is cutting back operations rather severely. While AAI isn't technically out of business, the company has "suspended all flight testing and further development" on the A700 twinjet, according to Robert Olislagers, Executive Director for the Arapahoe County Public Airport Authority at Centennial Airport (APA), home to AAI's headquarters.
"It appears investment capital has been pared down... due to last week's fall of the Russian stock market," said Olislagers, who added he had been unaware of any layoffs at AAI until he visited the company's headquarters himself Tuesday "after I received [ANN's] phone call."
Olislagers said company officials reassured him AAI is "definitely NOT closing its doors," and is still receiving investment capital... though substantially less than originally planned.
Exact figures on the number of layoffs number were not released, though Olislagers said it appears "most" workers at AAI were laid off Monday, though the company did retain "a number of senior engineers."
A formal announcement from AAI is planned later Tuesday, Olislagers added.
As ANN reported, Adam Aircraft filed for Chapter 7 liquidation on February 15. Two months later, the US Bankruptcy Court for the District of Colorado approved the sale of Adam's assets to AAI Acquisition, Inc., a Delaware corporation backed financially by the Russian-controlled Industrial Investors group of companies.
AAI kept relatively quiet about its plans until Oshkosh, when company President and CEO Jack Braly announced AAI planned to continue development of the A700 very-light jet and see it through to certification, expected early in 2010. The company discontinued production of the jet's predecessor, the problematic A500 inline twin-engine piston aircraft.
During the NBAA 2008 convention earlier this month, Braly said AAI employed about 200 people at its facilities at APA -- many of them former Adam Aircraft workers. The company had originally planned to double its workforce by the end of the year... but that was before the bottom fell out of the US stock market, affecting markets and investors around the world.
AAIA's Braly Announces 'Strategic Realignment'
Development Of A700 Suspended As BoD Eyes Economic Conditions
Confirming earlier reports to ANN, on Tuesday AAI Acquisition (AAIA) President and CEO Jack Braly announced what the company termed a "strategic realignment" of the company's goals and objectives in response to worldwide economic conditions.
Braly said AAIA's development schedule, which had originally projected certification and first delivery of the company's A700 all-composite Very Light Jet (VLJ) program, is being reconfigured in light of recent economic developments around the world.
Members of AAIA's investment team and Board of Directors are currently evaluating economic and market conditions before announcing a new schedule for the A700 twin-engine business jet. Flight test and other development activity have been suspended. AAIA's workforce is being pared to a size necessary to sustain the company while a new schedule and strategic plan are developed.
Originally, AAIA had projected FAA certification and first deliveries of the A700 in 2010. Members of AAIA's workforce were notified of the realignment -- and resulting layoffs, which AAIA declined to give firm numbers on -- at the close of business Monday.
Braly declined to speculate when a new schedule might be announced, noting that worldwide economic conditions are unprecedented and will need to play out somewhat before a proper evaluation and plan can be formulated.
Adam Aircraft Lives To Fly Another Day
Court Approves Russian-Owned Company's Acquisition Of Assets
Adam Aircraft will fly again... thanks to more than little outside help. Last week, the United States Bankruptcy Court for the District of Colorado approved the sale of the assets of Adam Aircraft Industries, Inc. to AAI Acquisition, Inc., a Delaware corporation which is part of the Russian-controlled Industrial Investors group of companies.
As ANN reported, Adam Aircraft filed for Chapter 7 bankruptcy on February 15, 2008. Legal counsel for the purchaser was Industrial Investors' advisor, Orrick, Herrington & Sutcliffe LLP, whose Washington, DC-based team included corporate partner Olga Sirodoeva and associate Paul Zarnowiecki, and bankruptcy partner Richard Wyron; Holland & Hart LLP was its local Colorado counsel.
Legal counsel for Jeffrey A. Weinman, the trustee in bankruptcy, was Lindquist & Vennum, whose Denver-based team included bankruptcy partner J. Smiley and corporate partner Harold G. Morris.
The purchase price was $10 million plus amounts due under the contracts assumed by the purchaser.
While Adam Aircraft currently has two aircraft product offerings -- the A500 inline-twin and A700 very light jet -- there's little mention of the former in company statements. "We plan to revive Adam Aircraft's operations, including continuing the process of certification for the A700 jet," said Dmitry Shokhin, Vice President of AAI Acquisition, who added the company plans to 'broaden' its product line, as well.
Industrial Investors is a large Russian private equity asset management company, specializing in transportation projects. The company manages assets of over $3 billion US. The company has a Colorado connection, as well... as former Governor Bill Owens is on the board of directors of FESCO, one of the companies of the Industrial Investors group.
Industrial Investors own Russian air-taxi operator "Dexter" and the first business jet airline "Velvet Club." Industrial Investors expect the new acquisition to hold its own ground as the manufacturer of very light jets for air taxi and general aviation markets.
Reports: Buyer Agrees To Pay $10 Million For Adam Aircraft
Hearing On Sale Expected This Week
They may be down... but not necessarily out. Less than two months after Adam Aircraft Industries announced it would enter Chapter 7 liquidation, a possible buyer has emerged that might allow the A500 inline piston twin aircraft, and its A700 VLJ sibling, to return to the skies.
The Denver Post reports the trustee in the bankruptcy case agreed Saturday to sell Adam to an entity called AAI Acquisition for the sum of $10 million, plus settling up with some of the planemaker's other creditors. Paul Zarnowiecki at the Washington, DC-based law firm Orrick, Herrington & Sutcliffe LLP is listed as the contact person for the buyer.
As ANN reported, Adam Aircraft filed for liquidation February 19, eight days after the company shut down its operations in Denver and Pueblo, CO. Hints of significant problems at Adam came to light the month before, with the company's announcement of layoffs for close to 300 workers, and the suspension of operations in Pueblo and Ogden, UT.
At the time, the company cited the need to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reasons for the decision.
Adam delivered about seven A500s to customers in 10 years of operations, and had pinned its hopes on the A700 -- which had attracted far more orders than the A500, including several from air taxi operators, and also shares several components with its piston-powered sibling.
A hearing on the sale is to occur Wednesday, the Post added. It is believed AAI Acquisition's bid was the only qualified one received; it's not known yet whether the new owner will hire former Adam workers.
Aero-News Alert: Adam Aircraft Files For Chapter 7 Liquidation
Bankruptcy Court Petition Lists "Hundreds" Of Creditors
ANN REALTIME REPORTING 02.19.08 1430 EST: Aero-News has learned Adam Aircraft has filed for Chapter 7 liquidation, effectively dashing hopes the company would manage an 11th-hour funding miracle and continue operations.
"In the absence of additional funding for the company to continue operations, it is ... in the best interest of the company, its creditors, shareholders and other interested parties" to file Chapter 7, the company said in a court filing, according to the Denver Business Journal.
The Denver Post reports the petition was filed last Friday in US Bankruptcy Court in Colorado, and includes "hundreds" of creditors -- including company founder George F. "Rick" Adam, Jeppesen Sanderson, several city and state offices and utilities throughout Colorado and Utah, and Denver's "Wings Over The Rockies" Air and Space Museum.
Also listed as creditors are those who had taken delivery of Adam's A500 twin piston aircraft -- including Mike Leahy, who took delivery of the first A500, and the New Mexico State Patrol, which took delivery of the last A500 shortly before the company announced it was in serious financial trouble.
As ANN reported last week, Adam shut down ALL operations February 11, and laid off its remaining workers... but held open the possibility of a last-minute bailout, with an Adam spokesperson calling rumors of an impending bankruptcy filing "premature."
Sadly, that hope proved overly-optimistic... and the last Adam official, CEO John D. Wolf, tendered his resignation effective February 15.
Hints of significant problems at Adam came to light in January, with the company's annoucement of the layoffs of close to 300 workers, and the suspension of the planemaker's operations in Utah. At the time, the company cited the need to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reasons for the decision.
One week later, details of a January 15 letter to stockholders from Wolf came to light, outlining the company's financial issues. The letter stated the company's future hinged on completion of two successful financing transactions, the first of which called for Adam to raise $30.5 million by the end of January. The company reportedly secured $5.5 million of that in late December... but follow-up funding never materialized.
The company delivered approximately seven A500s to customers.
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