Funding Is Front and Center at Adam

 - January 22, 2008, 11:08 AM

Adam Aircraft’s financial predicament is apparently more dire than the company let on last Thursday when it announced it was laying off 300 employees and making other “strategic adjustments.” Just two days before this announcement, Adam Aircraft CEO John Wolf sent a letter to shareholders warning that the private company could face liquidation of some assets if two more financing rounds prove unsuccessful. The letter was obtained by the Wichita Eagle, which reported on it this morning; an Adam spokeswoman confirmed that the information in the article is correct but declined to provide AIN with a copy of the letter. The first critical financing round needs to raise $30.5 million by the end of this month. As of late December, Adam secured $5.5 million, but if it doesn’t reach the full amount by month’s end, some company assets might be liquidated to satisfy obligations to “senior lenders,” according to Wolf. “A successful completion of this financing transaction will enable [Adam Aircraft] to continue to operate until a second, larger equity financing of at least $100 million led by Citibank can take place on or before May 31,” Wolf wrote to shareholders. Reflecting its tight financial situation, Adam is offering a 49.9-percent share in a newly formed subsidiary (details undisclosed at press time) to those who invest in this month’s funding round. The Englewood, Colo.-based would-be VLJ manufacturer last week said it has enough funding to bring its A700 very light jet to certification and implement production-streamlining initiatives.