Taking flight

Saturday, January 24, 2004

Lengthy legal battles that have stymied Cape Girardeau's Renaissance Aircraft manufacturing venture soon could be over, but company president John Dearden admits serious financial problems remain.

Ultimately, those problems could affect city government finances, Cape Girardeau officials say.

The company, all but shut down by the litigation, on April 1 is scheduled to start providing the city of Cape Girardeau with $24,773 a month in bond and lease payments.

Dearden said he's looking for investors to provide an infusion of cash so the company can meet its financial obligations. If that doesn't happen, the city would take possession of the Renaissance Aircraft hangar at the Cape Girardeau Regional Airport and seek to lease it to someone else, city officials said.

Airport manager Bruce Loy said he doesn't think the hangar would be difficult to market. In that case, city manager Doug Leslie said, the goal would be to secure hangar lease payments that would cover the bond payments.

If the hangar remained empty, the city would be stuck with making the bond payments itself.

"We certainly hope the company can come around and be successful," Leslie said.

The company has been financially drained by a legal battle with the Arizona-based Don Luscombe Aviation History Foundation, which sued over Renaissance Aircraft's plan to manufacture the Luscombe 8F airplane.

The Luscombe foundation claimed Renaissance wrongly took $8 million in equipment -- machinery, tooling jigs and dies -- needed to manufacture the plane when it relocated to Cape Girardeau.

When Renaissance countersued the foundation, an Arizona court ordered the foundation to pay $2.2 million to Renaissance Aircraft.

The foundation subsequently filed for bankruptcy. The proceedings so far have prevented the company from obtaining clear rights to make the plane, according to Dearden's attorney, Eric Rowe of Washington, D.C.

Building business

The city sold $2.1 million in bonds to construct a hangar for Renaissance at the regional airport and to pay for the extension of water and sewer lines to serve the business.

The Missouri Department of Economic Development approved a grant of nearly $480,000 to assist the city with constructing a major water line to the Nash Road area near the airport and a $750,000 loan for working capital for Renaissance Aircraft.

Renaissance Aircraft relocated from Eastman, Ga., to Cape Girardeau in 2001 amid promises of manufacturing hundreds of planes a year and creating at least 200 new jobs. After operating temporarily out of several buildings, the company moved into its new hangar in October 2002.

So far, there's little to show for the state and local investment except the 48,000-square-foot hangar, which is owned by the city and leased to Renaissance Aircraft.

The company, which at one time had 20 employees and as late as last May had nine employees, currently has no full-time workers.

Under its agreement with the city, the company owes about $250,000 a year in bond payments for 20 years, plus an additional $41,000 a year to lease the hanger building and another $11,000 annually to lease the land. The hangar lease is for 30 years, city officials said.

The company also agreed to pay the city $500 per airplane manufactured. If a plane is sold at the airport, the $500 fee would be waived, and the city would collect sales tax on that transaction, the agreement stipulates.

Jim Grebing, Missouri Department of Economic Development spokesman, said the company agreed to create 80 jobs as part of its loan arrangement with the state.

Cape Girardeau industrial recruiter Mitch Robinson, who helped convince Renaissance Aircraft to move here, said he plans to meet soon with Dearden to discuss the situation. "We are all very concerned," he said.

Making one plane

Since moving to Cape Girardeau, the company has built only a single Luscombe, a two-seat recreational plane whose design dates to the 1930s. A second plane is about 90 percent completed, Dearden said.

The completed plane has yet to be flown. But Dearden said his company has a demonstrator Luscombe, manufactured prior to moving to Cape Girardeau, that has been flown over 500 hours.

There is a market for new models of the vintage plane, Dearden said. At a base price of $80,000, the Luscombe could cost less than the price of an assemble-it-yourself kit airplane, he said.

The plane, which can travel at speeds of 140 mph, would appeal to recreational pilots who want to fly for the "sense of adventure," he said.

The plane can land and take off on short runways and grassy fields. It can be used for aerobatics.

"It is a fun airplane," Dearden said.

The airplane manufacturing industry has largely ignored the needs of recreational pilots, he said. Dearden said his company can help fill that void.

But first it has to get beyond the legal hurdles.

Earlier this week, Dearden was in Phoenix for a hearing in federal bankruptcy court. Rowe said the bankruptcy proceedings could be completed after a final court date on Feb. 2.

Once the bankruptcy case has been resolved, Renaissance will receive the airplane production certificate giving the company clear rights to make the plane and all accompanying drawings and engineering designs, Rowe said.

That is essential if Dearden is to attract additional investors for his business, Rowe said.

Rowe said the foundation doesn't have any cash, but Renaissance has secured a judgment against the former president and founder of the foundation, Doug Combs. Dearden said he hopes to recover as much as $2 million from Combs but doesn't expect to see any cash immediately. As a result, the judgment won't solve Renaissance Aircraft's impending financial obligations.

Still, Dearden believes he can get his business rolling.

"I feel very optimistic at this point," he said.

mbliss@semissourian.com

335-6611, extension 123

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