Sky obscured over financing of Nimbus/Eclipse 500 mega-deal

 - May 15, 2008, 4:54 AM

In early February the Nimbus Group of Fort Lauderdale, Fla., announced it had received a “commitment” for $1.2 billion to finance its previously disclosed order for 1,000 Eclipse 500s for its proposed air-taxi fleet. In the announcement, Nimbus said the financing commitment came from Dafin Asset Finance Ltd., “an affiliate of the Royal Bank of Scotland International [RBSI].”

In last month’s issue (AIN, March, page 4), we incorrectly reported that the financial commitment was made by RBSI. Nevertheless, in its response to a query from a prospective purchaser of Nimbus shares, the group communications manager for the bank stated it has “absolutely no connection with Dafin and the Nimbus Group financing deal. We are not an affiliate of Dafin and have no relationship with either company.”

The bank further said in the correspondence that it first heard about the alleged connection through the announcement released to the press by Nimbus on February 8. “We spent some time talking to both Nimbus and Dafin about the source of this erroneous story and received a retraction and apology from Dafin for using RBSI’s name without consulting us and without any substance to the story.”

Nimbus Group chairman and director Ilia Lekach told AIN that “people from the bank who saw the press release thought the release should have been issued by the bank’s asset finance arm (Lombard), but didn’t dispute use of the word ‘affiliate.’” When Lekach told the bank, “No problem, we’ll make a correction,” he said the bank called back and said, “You know what? We don’t need a correction, it’s fine.”

Dafin CEO Steven Redman told AIN that Dafin has “relationships with a number of preferred financial institutions around the world, including the Royal Bank of Scotland International in the United Kingdom. Dafin has only just begun the structuring process of the agreement with Nimbus and it is too early to speculate as to which financial institutions will be involved in the final structure and at what level. We expect RBSI to be involved in the process, but the extent of its involvement depends on the bank.” He confirmed the financial agreement with Nimbus, saying that some of the $1.2 billion is coming from Dafin but the bulk will be coming from banks and other financial institutions.

When AIN inquired into the matter directly with the bank’s group communications manager, we were told the bank “couldn’t comment any further on this issue” and “considers this matter closed.” Calls seeking clarification from the bank’s communications director were not returned. When asked to confirm a business relationship between Dafin and the RBSI, the head of group media relations for the Royal Bank of Scotland Group, David Appleton, said only that “Dafin and their directors George Stander and Steve Redman are known to us.” Appleton would not elaborate.

Dafin Asset Finance has been helping to arrange aircraft customer financing for two years, according to director of European operations George Stander, but not on the scale of the Nimbus project.

There is no Dafin Web site and CEO Redman is also the marketing director for Datadeal Technologies, a Bryanston, South Africa supplier of portable computers that he cofounded. “Due to my commitments at Dafin,” Redman told AIN, “I am no longer involved in the day-to-day management. Other than that, there is no association between the two companies. Due to mutual confidentiality agreements, I am precluded from commenting further on the transaction [with Nimbus] or our relationship with the bank.” Redman said Dafin is registered in the Isle of Man.

Despite the seeming mystery surrounding the arrangement, Dafin stands by its assertion that it has a relationship with RBSI (if not an “affiliation,” as incorrectly reported by Nimbus) and that the denial provided by the bank to the prospective investor was incorrect.

It has been suggested by some observers that the bank made an embarrassing mistake in denying a relationship with Dafin but that it is difficult for a prestigious organization such as the RBSI to admit that something like this happened, so it’s easier for them to say nothing more. In any case, Dafin said it is working with a number of financial sources for the Nimbus project and doesn’t believe the confusion with RBSI is a matter that should sidetrack the project or cast aspersions on any of the players.

Incidentally, Dafin’s confirmed relationship with Nimbus started after Dafin visited Eclipse, became “impressed and very excited” with the Eclipse 500 program and asked for an introduction to Nimbus. Eclipse acknowledged it met with Dafin representatives and introduced them to Nimbus.

Eclipse: Order Not a Life-or-death Situation

For Albuquerque, N.M.-based Eclipse Aviation developer of the Eclipse 500 ultra-light twinjet, the failure of the 1,000-airplane order from Nimbus would not be a life-or-death situation, according to company CEO Vern Raburn. “We have a contractual agreement with Nimbus and, like all Eclipse customers, there are obligations in terms of progress payments based on the number of aircraft ordered. In the case of Nimbus, the 1,000 aircraft ordered are to be delivered over a four-year period starting in 2004 [the anticipated first year of Eclipse 500 production.]” Nimbus senior v-p of business development Lucien Lallouz told AIN in February that Nimbus had made the first payment on schedule.

Raburn stressed that customer deposits are not financing the development of the airplane. “Not a single penny of customers’ money has been used to date to develop the Eclipse 500.” That will not be the case after certification when production is under way. With measured understatement, Raburn said, “We obviously would be disappointed if Nimbus was to go away, which we don’t expect.” However, he said the loss of the order would “not severely harm” Eclipse.

The Nimbus Group evolved from, a publicly held company that was founded by Lekach, a Russian dot-com and perfume entrepreneur. In late January Nimbus announced its intention to sell, now a wholly owned subsidiary, so that it can focus “on the implementation of its business plan to eventually become a leading jet-taxi service.”

Earlier that same month, the company announced that retired USAF Gen. Charles Horner, who had been the commander-in-chief of all allied air forces during the Gulf War, had agreed to join the Nimbus board of directors as vice chairman.