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Eclipse EA-500 on sale

JimNtexas

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Everything in this post is opinion and rumor.

I'm told that the following is a portion of a letter sent by Eclipse Aviation to its deposit holders:

Limited Offer

Since the inception of the company, Eclipse has made it a priority to give something back when we were forced to make a change or didn't perform as we planned. Here are a few examples.

In 2003, after Williams International failed, we were forced to raise the aircraft price, but raised yours much less than the market price. We also made your positions fully transferable, which allowed you to realize the increased value of your position based on customer demand and price increases.

In 2005, when we increased the price of the Eclipse 500, we offered certain position holders whose deposits were in escrow, the opportunity to release their money from escrow, and save more than $30,000.

In early 2007, when our delivery schedule slipped, we offered affected customers an interest payment for every month we were delayed delivering their aircraft.

We are proud to have already built more jet aircraft at a faster rate than any other general aviation manufacturer in history. While this is quite a feat, our production is still not where we projected it to be. Our business model is based on high rate production and when we fall behind, there are more consequences than simply a delay when you will receive your long-anticipated airplane. One consequence is that our need for capital has increased. Therefore, we are making a special offer to our customers to help meet our need for short term funds while our production capability matures and we put in place additional long-term financing. As a result of the shortfall versus our production targets referred to earlier in this note, the company is raising additional financing. The financing we are seeking is relatively small as a percentage of the total capital we have raised to date. We have been successful in the past in our ability to raise capital and believe we will be able to close this financing within 120 days. In the meantime, we are looking to raise funds now so that we can complete our financing in an orderly fashion.

For a limited time, we are offering, an opportunity to fix the Standard Aircraft Price of your Eclipse 500 aircraft at $1,250,000 USD without any future price adjustments. The price will be fixed in exchange for a payment of $625,000, which will save you hundreds of thousands of dollars.

The details are as follows:

You may lock in your Standard Aircraft Price for your Eclipse 500 at $1.25M USD.

This means:

Your Standard Aircraft Price will not be subject to further price escalation due to inflation.

Your purchase price will be fixed, regardless of what changes Eclipse may make to the price of the Eclipse 500 in the future. The Standard Aircraft Price does not include any optional equipment you may select six months prior to delivery.

To fix your Standard Aircraft Price, you must sign and deliver to Eclipse a standard Eclipse 500 Aircraft Purchase Agreement, an Escrow Agreement, and remit to Eclipse Aviation $625,000 USD (50% of your new fixed Standard Aircraft Price), by December 14, 2007 (or such earlier date as Eclipse may terminate this offer). The $625,000 USD payment is in addition to any deposits you have already paid.

The $625,000 USD payment will be held in an escrow account until Eclipse has received at least $30M USD from customers accepting this offer. We believe that this amount, combined with other financing activities being pursued will be sufficient to provide Eclipse with the time to complete our capital raising activities.

Upon reaching $30M USD, funds can be drawn from escrow and made available as needed for use by Eclipse in its operations.Eclipse Aviation will honor this special offer to customers on a first-come, first-served basis only.

This offer is valid only for customers that have not yet assigned and delivered an Eclipse 500 Aircraft Purchase Agreement or remitted the progress payment due six months before delivery.Eclipse Aviation reserves the right to discontinue this offer at any time.

This is a chance for you to save a substantial amount on the purchase of your Eclipse 500 aircraft. By fixing the price at $1,250,000 USD, you are protected from changes in price due to increases in CPI-W or from other factors.

To demonstrate this incredible savings, consider the following.

If you purchased an Eclipse 500 for $1,295,000 USD with a delivery date in 2008, you would save approximately $360,000 USD - that's more than half of the $625,000 USD deposit.

If you purchased an Eclipse 500 for $1,595,000 USD with a delivery date in 2010 you would save over a half-million dollars!

The chart below indicates your potential savings based on when your aircraft is slated for delivery versus its base price. These are approximate amounts and represent estimates of CPI-W through your anticipated delivery date. The following also assumes savings on the Standard Aircraft Price only and does not include the price of Aircraft Optional Equipment.

Potential Savings ($000's) by Delivery Year

Base Aircraft Price ($M) 2008 2009 2010
$1.045 $57 $69 -
$1.070 $79 - -
$1.270 $326 $364 -
$1.295 $359 $409 -
$1.520 $350 $413 $426
$1.595 - - $509

Please take the time to review and absorb this offer. We have organized a special team that is prepared to provide the specific details of this offer, including all required documentation. This team's unique phone number is 866-436-9954, which will be staffed Monday through Friday from 8:30 a.m. to 6:00 p.m. Mountain Time. Phone calls placed into Eclipse Customer Care regarding this offer will be re-directed to this specialized team. Again, this offer is available for a limited time only.

Eclipse has accomplished many remarkable feats and is on the cusp of completing many more milestones. We are delivering an outstanding aircraft at an unbeatable value. We remain driven to providing you with the best customer experience in the industry, and we hope this opportunity further enhances our commitment to you.

If I recall correctly an EA-500 recently sold on Ebay for something on the order of $1.8M.

See also ANN.

 

deadstick

Pucker Factor: HIGH
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e^x
This is right on track for Vern and the McJet. I seem to recall that they have to deliver a few thousand copies of the 500 before they begin to emerge from the red. You ought to read the blog covering the certification and performance trials -- a bit of fuzzy math there.
 

ultrarunner

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It's all about the cost of money. No where does it tell you what cutting them a check for 600 grand is going to cost YOU.
 

NewmanF16

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This is a great deal, as long as they eventually deliver you an aircraft. This will reveal how faithful the faithful are.
 

GVFlyer

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Feb 22, 2002
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Buzz in the industry is that Eclipse may be going under. Although this might be much like Sam Clemens statement, "The rumors of my death have been greatly exaggerated..."; it is interesting to note that my ole buddy from Gulfstream, Clint Clouatre, who was formerly product marketing director for Eclipse, left to be senior marketing director for Embraer Executive Jets.


GV

 

mzaharis

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I'm not in the industry, so I really can't say much that hasn't been stated by others somewhere else, but I have always found it interesting that Vern has a strong tendancy to trash former vendors and other ex-business partners (Avidyne, that empennage manufacturer that is currently sueing them for non-payment, a venture capital firm that pulled out after some due diligence, some other vendors he has trashed in public). I think he's always operated on the, "You don't have to be nice on the way up, because you are not coming down" principle. If Eclipse suffers a significant downfall, it looks like a lot of people enjoy watching Vern's descent. Too bad that a lot of employees will be joining him on the ride, if it happens.
 
Last edited:

Swass

So long, America.....
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There have been a lot of ICT engineers and tool makers that left for Eclipse (good initial offers) that are second guessing themselves (a couple of buddies of mine in the know). It will be interesting.
 
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