Friday, November 30, 2007

Intrigue in Albuquerque -


Chance Discovery Starts Investigation

By: Staff Writer, Washington-In-The-Know

ALBUQUERQUE, NM – A janitor’s find here has implications far beyond the banks of the Rio Grande River. Manuel Ortega was cleaning a men’s room at the Albuquerque International Airport when he found an Apple iPhone on the sink. He scrolled through a few pages before turning it over to police. The authorities identified the owner, but not before discovering a confusing collection of emails, draft press releases, government documents, campaign strategies, videos and audio recordings.

The Apple iPhone belonged to Vern Raburn, president of Eclipse Aviation, a local producer of small jet aircraft. The contents of the phone disclosed a late-night meeting at the airport between Raburn and Senator Larry Craig (R – Idaho). A draft press release revealed that the company was leaving Albuquerque to relocate in Pocatello. Senator Craig was quoted, “Eclipse Aviation has a wide stance and we’re glad to see it extends to Idaho.”

This is likely to have significant repercussions as New Mexico politicians offered tax incentives and invested both political and financial capital in the endeavor. When asked to comment, Raburn said, “Senator Craig made a particularly attractive offer and Idaho is a business-friendly environment.”

Former Vice President Al Gore also figures prominently in the discovery. Fresh after receiving the Nobel Peace Prize, Gore has become a venture capitalist. He has joined Kleiner, Perkins, Caufield & Byers, a renowned Silicon Valley firm. The documents reveal that Gore is leading an $800 million investment round in Eclipse Aviation. A press release quotes Gore, “We’ve launched an environmental fund and Eclipse Aviation is the perfect vehicle. Vern Raburn told me they make green airplanes and he is convincing. Cessna called to say that’s just the color of the primer coat but I don’t believe ‘em.”

Gore continued, “Eclipse will revolutionize travel with a jet that adds no carbon to the environment. Vern told me the Eclipse 500 actually retains carbon from each flight. You open a door after landing and unload a big bag of charcoal briquettes. You could sequester this carbon by burying it in the backyard, but hell…. I’m going to put it in my grill and cook some burgers. I have to thank Vern for helping me become a venture capitalist. He’s coached me on technology and taught me to say Silicon Valley, not Silicone Valley.”

The most explosive revelation on the iPhone relates to the 2008 presidential campaign. The documents reveal that Senator Hillary Clinton (D – New York) plans a dramatic reorganization of the Federal Reserve Bank if elected. She plans to seek the resignation of the current Chairman, Ben Bernanke, to be replaced by Vern Raburn. With little experience outside of the software and aviation industries, Raburn is a puzzling candidate.

A confidential campaign document entitled, ‘Project Evita’, outlines a disturbing plan. If Clinton is elected and Raburn is confirmed, they plan a dramatic increase in monetary inflation. Over the centuries, governments have used this to reduce or eliminate their national debt. Runaway inflation makes the deficit in ‘old’ currency easy to repay. The Consumer Price Index (CPI) is sensitive to money supply, interest rates and commodity prices.

Clinton’s motivation is described in the Project Evita document. Runaway inflation would cause widespread social, political and financial unrest. Near the end of Clinton’s second term, she plans to seek a constitutional amendment allowing two additional terms. She expects a public outcry to remain in office, quell fears and stabilize the economy. Thus her administration would run through 2024.

Raburn’s motives are less clear. No one seems to know why he would benefit from large year-after-year increases in the CPI. Analysts speculate that if the Eclipse 500 were operated as Air Force One, even more orders would be added to the thousands already on the company’s books.

Note: The blog administrator has not been able to second source this article contributed by black tulip.

The tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.

14 comments:

WhyTech said...

It took me awhile to figure out tht this wasnt for real. Gore joining KPCB and the Clintions seeking additional terms seemed to anchor this in reality. I fully expect both to happen.

Well done, BT!

WT

ColdWetMackarelofReality said...

Standing by for the inevitable sour-puss Faithful drive-by declaring the blog dead, nothing new to write about, stupid stories, etc.

Almost as predictable as Old Faithful, just not quite as cool.

Great effort - funny stuff.

I can hear Hillary now - don't cry for me Albuquerque.

ColdWetMackarelofReality said...

Wanting to keep us focused on the pressing cash needs in ABQ I will ask again:

Ken, I believe you owe it to us on the blog to let us know when you sent in your deposit to keep God from calling Vern home and lock-in your price at only $1.25M.

Originally asked at 5:49 PM, November 27, 2007 - NO RESPONSE YET to either me, or to Gunner's $10,000 challenge.

ColdWetMackarelofReality said...

Sorry, Ken did answer Gunner's challenge, with a petty personal attack and chickening out after Gunner offered to have EO or some other neutral 3rd party hold the dough.

fred said...

why the faithfull do not take-over the firm ?

they would be "boss", wouldn't risk much more , finances would be easier to reach ....

if E500 is to be a success , why sharing it with a liar whom hold your money for so long for no pennies of interest ??

who's talking of "chickening ?"

cj3driver said...

And now the secondary market disruption begins.

this morning as posted on Controller:

S/N 923, 2nd quarter 2009 delivery - NO CPI ESCALATOR - Lowest price on the market
$1,295,000 is the TOTAL price + TT&L. The price INCLUDES the LX interior. This offer only available through early December.

hummer said...

DayJet isn't cutting it.
Other Part 135 are on hold.
Short term financing bridge of
35 Mil due on Dec. 15th.
Long term financing 120 days off.
Breakeven production of 500/600
not in the foreseeable future and
one/day not demonstarted.
Credit markets are tight and uncertain this year and next.
Those are the facts folks.
No one can dispute them.
Anyone that buys a position under
these circumstances is a fool.
Anyone that adds 650k to the pot
without some qualifications have
thought processes that are at least questionable.
Just my opinion.
Time will tell.
Yet "When you are up your ass in alligators, it is difficult to remember that your inital objective was to drain the swamp"
Alan Dundes & Carl Pagter

airtaximan said...

Hummer,

"you HATER"
"YOU TURN COAT"

Kidding...

Because of your post, I am no longer referring to Eclipse as E-clips.

They have grown-up aviation problems now. Their current issues involved producing a quaility product, and supporting it professionally. They are not a development stage company - they are playing with different financing, different standards, and a host of real aviation problems. None will be solved with e-cash or e-strategies...

Welcome to the land of Dinosaurs:
"When you talk about dinosaurs, you are speaking about something
that was real, powerful, majestic. If dinosaurs walked the Earth today, we'd probably
stand in awe looking at them like someone from deep in the jungles visiting New York for
the first time, staring at the skyscrapers." (unknown author)

airtaximan said...

Point?

You think Dayjet will bail E-c(ooppps!) Eclipse?

Perhaps...

airtaximan said...

Hummer,

why did you delete "Ed has $35Mil)???

airtaximan said...

CJ3,

YOU posted that on Controller, right?

It's SATIRE, right?

No?

OMG! What a surprise!!!

T206H said...

Hello,

Long time reader, first time poster. Here goes:

Credentials seem to be important on this blog. Here are mine: I own a business; I’m an instrument rated private pilot and I own a Cessna T206, which I regularly fly to the flight levels with large loads and suck too much oxygen as a result. This works really well when eastbound and really poorly when going west.

As for my relationship with Eclipse, I have none other than being a prospective customer. I called the Eclipse factory early this year and inquired about a purchase. Shortly thereafter I discovered this blog. Whoever noted that potential Eclipse purchasers were likely to wander across this blog in their due diligence of Eclipse (both the plane and the company) was correct. Most everyone with internet savvy and some sense of fact checking will end up here sooner or later.

Here’s another credential: I used to be the CEO of a business that went through Ch 11. It was a long time ago... It was an emotionally bruising experience. I got to see most sides of the business bankruptcy issues in that process. For instance – how does a company get to Ch.11 (what mistakes were made?); what could have been done differently; could it have been predicted?; who (which personnel?) contributed to the process in both negative and positive ways. What had I down that allowed the bad business conditions to develop? It was a depressing experience myself and for many of my company’s employees, customers, vendors, investors and bank. It’s certainly not fun – never want to go there again – and I run my current business accordingly. As a result, I do understand many of the issues which financially contribute to the demise of a business.

I will not use monikers which mock the point of view of the ‘other side’, whatever that is. An example is EA499.5. Not going to go there.

Now, I just wanted to make a few comments:

1) What about the jet in question? The complete Eclipse EA500 would be a wonderful piece of transportation. No matter what, at the end of the day, if everything’s delivered, working, certified, supported, there’s a bunch of folks who would like that plane and find it ideal for their personal transportation requirements. It’s back to being a disruptive buy at $1.25mil.

2) How could *I* afford to buy one? I don’t have large sums of money socked away; I would be a cash flow purchaser, and full disclosure: I can’t afford it. I was surprised by the factory’s indication that I would have to give a deposit in order to get in line to buy their product, and that I would have to wait until 2009 for delivery. They offered some bank financing choices, but it immediately became clear that none of the banks would act remotely like Cessna Finance. (CFC has been a great business partner for me in the purchase of my T206. Basically, if you live and breathe, have adequate cash flow and credit history, and can put 10% down, you can get a Cessna. Cirrus seems to work the same way, and I’ll bet the rest of the GA world does as well.) If Eclipse didn’t have a factory finance option, then their ability to sell airplanes would (and is) greatly diminished. The alternative, from a business standpoint, is for their management to under price the product relative to its true market value, and allow the potential equity in that statement to draw cash from speculators and the customer base who are cash buyers. This seems to have been a conscious business strategy on their part. There are numerous ways for this strategy to backfire. One of them is the FUD (Fear Uncertainty Doubt) it puts into the existing customers who’ve already ‘deposited up’ and the other is the FUD it puts into future prospects like me and many others who wouldn’t touch it until the smoke clears, if it clears. And then there’s the FUD with the vendors – it’s got to be considerable for the smaller guys with unsecured moneys owed from Eclipse. I’ve read the comments on D&B. My old company’s D&B rating certainly never said we were going bankrupt – but we did. Such is the reality of business. It’s like the fog of war – you simply don’t know the real situation.

3) How could Eclipse afford to finance the continued development and production of their product? Eclipse clearly has a program in place, where the customer provides financing to the factory by providing cash many months prior to delivery. This makes customers, in the event of a BK, unsecured creditors to the company. The recent deposit request/bump highlights how much they are reliant on customer deposits to make it through.

4) Life has taught me to be prudent in financial situations. It is a rare situation indeed where something that looks like a dead fish, smells like a dead fish, isn’t a … dead fish. There are so many aspects of the Eclipse business model which create this air of business danger!

5) However, there are exceptions to the dead fish rule.

6) In business, cash is king. Those who have it live to fight another day, and those who don’t, … don’t. It would be unreasonable to assume that Vern Raburn hasn’t been working overtime for the last two months, trying to raise another round of money. He may have been offered money already; although it may appear to him to be a personal ‘Hobson’s Choice’, because I suspect the money he’s being offered is tied to significant dilution and/or loss of control of his enterprise and/or ‘cramdown’ and/or forced BK. Alternatively, he may be working on a rational round of financing, where he’s been given some stipulations which must be met prior to close. These stipulations require meeting some milestone (EG, increased production rates; increased customer financing; you name it…) prior to close of the round. My best guess is that he’s looking at a cramdown of some sort. The early equity investors probably are facing substantial dilution. That’s how new investors make their money: essentially, older and early investors are written off. Most of the benefits of future profits flow to the last round of investors.

7) It is also clear that all of the information required to make intelligent business decisions on behalf of Eclipse are only fully known to Eclipse management. In other words, if they pull it off, they pull it off!, and we don’t know why, and life is glorious for them. This is the corollary to point #5.

8) There is life on the other side of Bankruptcy. There's also life on this side of Bankruptcy, if aggressive moves are made in time. If I was ‘King For A Day’ at Eclipse, I’d make the following moves:

8.a Take the website down. Replace it with a retooled mission statement for a couple of weeks, then bring up a new website. The mission statement would be something like this:

“Our mission to produce the finest, most economical to operate 5 place twin engine business and personal jet in the market.”

Below that it would read:

“We’d like to talk to you about our jet. We like it a lot; we think you will too. We’ve priced it fairly and we want to help you buy it. Give us a call.”

8.b Reject all customer purchase contracts which are not profitable. Who knows, this might be every last one of them. Obviously give reorganization preference to customers who’ve already placed the deposits. For goodness sake, raise the price of the product!! If any product truly has a 3 year lead time, then management made a huge blunder in under pricing the product to market demand. Management gave equity to the customer base, and that’s just stupid. I guess I’m trying to say that there’s no such thing as a free lunch, especially in GA.

8.c Dump AVIOng in favor of generic Garmin. Heck, just drop a couple of 430s or 530s or whatever in and get the planes rolling out the door, so they can fly IFR/GPS.

8.d Pray like crazy that FIKI gets wrapped up, and that the public announcements to date on FIKI are the truth.

8.e Same for EASA stuff.

8.f Same for anything else that’s been rashly promised and not yet delivered.

8.g Reset quoted production levels and delivery times to rational levels which have already been demonstrated. Reprice the product so that operations are profitable at that level.

8.h Obtain bank DIP financing that would also provide a rational tie in to post-delivery customer financing. Create a customer delivery sales program that would work like this: 10% down at order; another 10% at delivery; balance of 80% on financing. That would stir sales at rational (EG profitable) price levels.

8.i Complete the equity financing round. As a lead investor, post BK, life might get a lot easier to raise money.

8.j Find a bigger partner who wants the product and the TC, and is willing to pay real value for it. Don’t have a realistic clue who that is… can’t imagine it would be Cessna.

That’s it for real comments.

flyger said...

T206H said...

8.c Dump AVIOng in favor of generic Garmin. Heck, just drop a couple of 430s or 530s or whatever in and get the planes rolling out the door, so they can fly IFR/GPS.

That's *exactly* what Eclipse did to sn 51 to fly it to Europe. How is that for irony? The Eclipse had more capability with a hacked in Garmin than anything Eclipse has been working on for 8 years!

The avionics fiasco is ego induced. Vern thinks he can do it better than anyone. That chutzpah will be his downfall.

Jim Howard said...

t206h, thanks for the insightful post.