Avtek Corp., a Camarillo firm that is developing a novel corporate airplane built mostly of plastic composites, said its bid to obtain financing to complete the project got a boost last week from the state of Pennsylvania.
But Avtek's founder and controlling stockholder, Robert Adickes, also disclosed that he is in danger of losing control of his company if he cannot raise all the money he needs by June 1.
Avtek has a prototype of the new plane, but now needs about $20 million to pay for testing required by the Federal Aviation Administration. FAA approval is needed before the company can market the aircraft, which has a planned price tag of $1.75 million and is touted by Avtek as a low-cost, fuel-efficient alternative to other corporate jets in its class.
About 96% of the plane's frame is made of two plastic-like composite materials. The plane, which will seat six to 10 passengers, also has two fanjet engines--basically jet engines with propellers--and can reach speeds up to 400 m.p.h.
Adickes, 66, was a TWA pilot for 40 years until he retired in 1980 and joined other aviation veterans to develop the Avtek plane.
Avtek plans to raise the $20 million it needs by selling bonds to institutional investors, such as insurance companies, Adickes said. But those potential investors want the bonds to be guaranteed by third parties in case Avtek defaults, he said in a telephone interview.
Pennsylvania recently agreed to guarantee $8 million of the debt, in exchange for Avtek's pledge to build a manufacturing plant in Pennsylvania employing up to 450 people, he said. Avtek also is holding talks with other unidentified groups to arrange guarantees for the remaining $12 million, he said.
Avtek is under pressure to float the bonds by June 1. If it does not, the government of Finland can then exercise an option it bought last year to acquire 80% of Avtek in exchange for providing the money needed to complete testing of the Avtek plane, Adickes said. His family now owns about 65% of the company.
The option also allows Finland to build the plane in Finland, and calls for Adickes to be paid royalties on future sales, he said.
Adickes said he originally sold the option to Finland because he needed cash to keep the project going. He declined to say how much Finland paid for the option, except that it was "a very large sum in seven figures."