ONE Avi­a­tion files for Chap­ter 11 bank­ruptcy

Eclipse par­ent firm wants to re­struc­ture $199M in debt

Albuquerque Journal - - BUSI­NESS - BY KEVIN ROBIN­SON-AVILA JOUR­NAL STAFF WRITER

ONE Avi­a­tion Corp., which owns Eclipse Aero­space in Al­bu­querque, filed for Chap­ter 11 bank­ruptcy on Oct. 9.

The com­pany wants to re­struc­ture $198.8 mil­lion in out­stand­ing debt obli­ga­tions to keep de­vel­op­ing its EA700 Series air­craft.

That’s the next gen­er­a­tion of the Eclipse Avi­a­tion very light jet orig­i­nally built by the com­pany’s pre­de­ces­sor, Eclipse Avi­a­tion Corp., which went bank­rupt in 2008. Eclipse Aero­space bought the as­sets of the old jet maker out of bank­ruptcy for pen­nies on the dollar, and then merged with Wis­con­sin­based Kestrel Avi­a­tion in 2015 to re­launch as ONE Avi­a­tion.

But the new firm has suf­fered from low de­mand for gen­eral avi­a­tion air­craft and high up­front costs to build the new EA700, lead­ing to a cor­po­rate restruc­tur­ing and lay­offs last year that re­duced its work­force from about 200 pre­vi­ously to 64 now. If the court ap­proves the com­pany restruc­tur­ing plan, 48 em­ploy­ees would re­main with Eclipse Aero­space, which is based in Al­bu­querque.

As of June 30, ONE Avi­a­tion had about $222 mil­lion in to­tal as­sets and $256 mil­lion in li­a­bil­i­ties, ac­cord­ing to its bank­ruptcy fil­ing.

Of the nearly $199 mil­lion in debt obli­ga­tions, about $59 mil­lion, or 30 per­cent, is held by one cred­i­tor, Ci­tik­ing In­ter­na­tional US LLC. An­other $43.3 mil­lion in se­cured notes, plus $24 mil­lion in un­se­cured notes, are held by a num­ber of in­di­vid­u­als and en­ti­ties.

The com­pany also owes about $53 mil­lion in gov­ern­ment devel­op­ment loans, $9.2 mil­lion to sup­pli­ers of goods and ser­vices, and $10.8 mil­lion in “mis­cel­la­neous” debt obli­ga­tions. That mis­cel­la­neous cat­e­gory in­cludes a $254,137 debt to the City of Al­bu­querque for Lo­cal Eco­nomic Devel­op­ment Act Fund­ing.

Un­der ONE Avi­a­tion’s Chap­ter 11 restruc­tur­ing plan, 100 per­cent of the Ci­tik­ing debt would be con­verted to eq­uity hold­ings. Cred­i­tors’ se­cured notes would also be con­verted to eq­uity, but at a sig­nif­i­cant dis­count. And un­se­cured notes would be dis­charged.

Ci­tik­ing, mean­while, would ex­tend a new $17 mil­lion line of credit for ONE Avi­a­tion to pay off sup­pli­ers and other credit hold­ers and al­low the com­pany to con­tinue de­vel­op­ing its new EA700 jet. Ci­tik­ing has al­ready agreed to the plan, but se­cured note hold­ers must still vote on it, and the courts must pro­vide fi­nal ap­proval.

“The path to this out­come has been long and dif­fi­cult,” ONE Avi­a­tion CEO Alan Klap­meier said in a pre­pared state­ment. “The man­age­ment team ap­pre­ci­ates the gen­er­ous sup­port it has re­ceived from em­ploy­ees, ser­vice providers, sup­pli­ers and cus­tomers through­out the process.”

The Chap­ter 11 fil­ing is the lat­est twist in the Eclipse jet’s long, wind­ing march to mar­ket and prof­itabil­ity.

The orig­i­nal Eclipse Avi­a­tion, launched by Vern Raburn in 1999, was con­sid­ered the pioneer in very light jets – a new type of twin engine air­craft that the com­pany be­lieved it could pro­duce in an as­sem­bly line process to keep prices down. That com­pany in­vested about $1.4 bil­lion in the jet’s devel­op­ment, pro­duc­ing some 260 air­craft be­fore the firm crashed and burned in the re­ces­sion.

Eclipse Aero­space bought the as­sets out of bank­ruptcy for $40 mil­lion.

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