Nimbus eyes Adam 700, quashes merger plan

 - May 8, 2008, 10:05 AM

Nimbus Group is now looking at the recently announced Adam 700 very light twinjet for its proposed affordable nationwide jet-taxi network. The Fort Lauderdale, Fla. company recently failed to obtain sufficient financing to complete its proposed purchase of 1,000 Eclipse 500 very light twinjets.

The surprise revelation follows Nimbus’ mutual termination of a letter of intent with Miami-based holding company Horizons Aviation, for an exchange of stock, after which Horizons Aviation would have had controlling interest in the merged companies. Top officials at both Horizons Aviation and Nimbus Group said that after further investigation it was determined the transaction would “not be in the best interest” of their respective stockholders.

“Essentially, we were reverse merging into Nimbus,” according to Horizons Aviation CEO Omar Botero. “The surviving company would have been Horizons Aviation. After we concluded a 30-day due diligence phase, we came to the conclusion that the transaction would simply not be in the best interests of Horizons Aviation. Nimbus was something we considered simply because we thought there was some strategic value in its being an Amex trading company and they had a potentially savable relationship with Eclipse Aviation, which is no longer the case,” Botero said. “It really is too bad that the Nimbus-Eclipse thing didn’t come through. That would have been a nice little agreement.”

According to Nimbus’ senior v-p of business development, Lucian Lallouz, “After reviewing both companies’ positions it seemed it wasn’t in the best interest of our shareholders, either, to go through with the transaction. We still need to have an affiliation with, or perhaps an acquisition of, an existing Part 135 operator within the next two years before we can implement our jet-taxi concept. So, for the next couple of years we need to be active in the aviation world.”

Nimbus insists it still has an order for 10 Eclipse 500s. “We own the first 10 aircraft” to be delivered in 2005, Lallouz maintained. “We paid for them.” But Eclipse is adamant and says absolutely not: “Nimbus doesn’t have any aircraft ordered and we do not have a penny from them.”

These and previous contradictions only serve to add to the questions and controversy that have surrounded Nimbus’ public position ever since it came into the aviation scene and announced its intention 15 months ago to purchase Eclipse 500s.

Nimbus told AIN, “We are planning to offer early Eclipse position holders [those scheduled to take delivery in 2004] a $100,000 premium on each airplane order so we may receive airplanes sooner. We’ve already had conversations with some early position holders. Hopefully that will allow us to avoid placing further orders with Eclipse.”

Now, the company is about to hitch its star to another airframer.

Nimbus Turns to Adam

As for looking at other aircraft, Nimbus has little faith that the Safire S-26 very light twinjet will be a viable player. “We believe strongly in the newly announced Adam 700,” said Lallouz. “We are talking seriously about buying some 700s.” A spokesman for Adam Aircraft of Englewood, Colo., confirmed that the company has talked with Nimbus officials “and they have all our deposit and contract requirements, and they are reviewing them right now.”

The Adam 700 is not as far along in the development cycle as the Eclipse 500, yet Adam Aircraft projects it will begin delivering the six-seat, $1.995 million airplane by late 2004 (AIN, November, page 1).

Lallouz contends, “We have already discussed an order,” but it is not one of the same magnitude as the derailed deal for 1,000 Eclipse 500s. “We are not going to make the same mistake,” said Lallouz, who puts the onus for the huge order on Eclipse. “We didn’t need to place that order. Eclipse needed us. We wanted to start with 50 aircraft and the order growth pattern would have been based on the demand that would ensue. We have learned our lesson and we are proceeding cautiously.”

Eclipse Aviation CEO Vern Raburn refuted this allegation, telling AIN that he doesn’t recall discussing a smaller quantity: “Nimbus always expressed interest in a larger order.” In any case, he said, “We had an agreement with Nimbus with a corresponding deposit schedule. The company was unable to fund any portion of its deposit. So a discussion of how many Eclipse 500s it should have ordered seems irrelevant. Fortunately, as we’ve progressed with the Eclipse 500 program, there has been a surge of interest in the air-taxi market and we were quickly able to replace the Nimbus order with orders that are secured with deposits from companies that are well positioned to leverage the opportunity fully.”

Nimbus told AIN that “we will probably announce an order with Adam soon.” But, Nimbus said, a final decision for an aircraft will hinge on the level of its direct operating costs more than the acquisition cost. “For example, if the operating costs would be sixty cents per nautical mile, then there is a business.”

When Nimbus announced its plan to merge with Horizons Aviation last August 16, it stated that the letter of intent “contemplates that Nimbus Group will dispose of its wholly owned subsidiary to allow the company to focus completely on the aviation industry.” In the October 23 termination notice Nimbus announced it had received a “firm offer” from a third party to buy “certain assets and liabilities” of the online auction site. Closure of that transaction, expected this month, will enable the company to continue its “strategic plan to make personal jet travel broadly affordable through the Americas.”

Horizons Looks at Other Acquisitions

Meanwhile, Horizons Aviation said, “We share Nimbus’ vision that affordable on-demand air-taxi service represents a future evolution in corporate aircraft travel.” To that end, the company will continue to seek strategic mergers. “There’s no doubt that Horizons Aviation began its deployment strategy as an acquisition strategy,” Botero said.

Horizons Aviation is a privately owned Miami-based holding company that, through acquisition, operates Turbine Support International at Vero Beach, Fla. Horizons’ Botero said the company is preparing to relaunch Central Air Charter, which it acquired, reorganized and relocated to Vero Beach. Fractional operations using Jetstream 31s/32s are set to start in the first quarter of next year. “We are also talking with three FBOs in the southeastern U.S. for potential acquisition,” he said.