GRAHAM WARWICK / WASHINGTON DC
Deal flounders when manufacturer returns former internet auctioneer's stock deposit after low value hinders sale
Eclipse Aviation has terminated its landmark 1,000-aircraft purchase deal with Nimbus Group on the eve of roll-out of the Eclipse 500 personal jet. The order was killed after former internet auctioneer Nimbus failed to meet the 30 June deadline to make a $5.86 million deposit on the first 70 aircraft.
The termination is likely to end Nimbus's plan to establish an air-taxi service using small jets, but Eclipse is believed to be talking to other potential large fleet customers with more robust financing. "Short term, the effect on us will be minimal, and in the long term, we still believe the air taxi market will be viable," says Eclipse.
When the order was announced in September, Nimbus was given until November to place a deposit, but the deadline was extended in the aftermath of the 11 September terrorist attacks. Nimbus says it issued Eclipse with $2 million in stock in February as a deposit on the first 10 aircraft, due for 2004 delivery. This was later returned.
Nimbus says the return of the stock hampered its ability to raise the required deposit. "It is our position that we met our deposit requirement for the first 10 aircraft as defined in our agreement," says chairman Ilia Lekach.
Eclipse chief executive Vern Raburn has come under criticism for accepting stock from Nimbus in lieu of a deposit at a time when the companies were trying to raise financing. "I made a mistake," he says. "Nimbus gave us stock as a deposit on the order. The contract said we had to be able to monetise the stock, but it was difficult to sell. Because of its low value we sent it back. We owned it for about 17 days."
Raburn says the 1,000-aircraft order played no role in Eclipse's last round of private financing, which closed days before the Nimbus order was announced last September, taking the sum raised by the Albuquerque, New Mexico-based company to over $220 million. "The bulk [of that round] came from investors committed long before Nimbus came into the picture," he says.
Eclipse says it is in talks about other large fleet orders, but because of its experience with Nimbus, the company is not identifying potential customers. It is believed to have around 160 customers for the Eclipse, including a 112 aircraft deal with Swiss company Aviace.
Lekach says Nimbus was counting on using the $847,000 Eclipse 500 as the basis for its planned air-taxi business, adding Eclipse's decision "makes it difficult to pursue our vision for an affordable personal jet-taxi business".
The Nimbus deal's credibility was damaged late last month when it emerged that Dafin Asset Finance, which claimed to have committed to finance the 1,000-aircraft order to the tune of $1.2 billion, had been misrepresented as an affiliate of the Royal Bank of Scotland.
Source: Flight International
