Sunday, July 29, 2007
Happy Days Are Here Again...
The skies above are blue again...
Vern's got coins in his jeans again...
Happy Days Are Here Again!
Just as the emerging crocus in our yards become the harbinger of spring, the new billboard looking for warm bodies up on the West side of Wichita tells us Vern is once more flush with cash.
During the past month or so, various sources have reported a new financing component, all in the $400m range. Don't know if that is a separate issue or if the company is stretching the truth again. But there has been a recent SEC filing. A full copy of the Form D document is available at http://www.eclipsecritic.net/.
The key numbers are on pages 5-6:
- Sold $272m out of $320m
- Netted $260m after fees
- Paid off $50m of debt
- Put $210m in working capital.
$210m won't get this company very far considering their current burn rate and the task ahead:
- Completing the long certification "to do list" including Avio NG, FIKI, "B" mods, fatigue testing, and who knows what other mod programs are on the docket to be fixed since the company is still looking for a number of engineers in a wide variety of disciplines.
- For some time to come, delivering airplanes that will cost far more to build than what will be collected on delivery. This is especially true for those in waiting who have completed their 60% down payment obligations. Delivering these airplanes will not generate much cash.
- The mod cost associated with updating to Avio NG (100 plus units)
- The mod cost for the "B" mod updates (38 units).
- The removal and replacement of the Aerazur di-ice systems (total units affected unknown).
- Bringing new service centers on line
- Buying simulators and establishing a training facility.
The $210m won't last near as long as the $225m that was raised last year at this time when Eclipse concluded a $225m pre-IPO convertible debt funding package from UBS. In addition, the $225m was supplemented by the 60% advance payments extorted out of - was it dozens or hundreds who were promised delivery in 2007?
One has to wonder where the next financing component will come from. Unlike previous recruiting ads in the Wichita paper, the latest a couple of weeks ago did not mention stock options.
Special thanks to the reader who forwarded the Form D filing and interpretation of the key elements on pages 5-6.