(DON FRAZIER / email@example.com)
The struggling airplane manufacturer -- which only recently had electricity and phone service restored to the building -- faces a Friday financial deadline to stay in business at the Cape Girardeau Regional Airport.
The company must pay nearly $65,000 to the city of Cape Girardeau and United Missouri Bank or risk being in default on its lease and bond-issue agreement, city officials said.
Of that total, over $36,000 is earmarked to help retire the bonds and over $28,000 would go to the city for lease payments. The city owns both the property and the building at the airport.
If Renaissance Aircraft defaults, the company would have to move out by next week, city attorney Eric Cunningham said. City officials would be forced to try to lease the building to another aviation manufacturer.
If the building isn't leased by next April, the city could be left having to pay off bonds used to build the facility.
Unless the bonds are refinanced, the city would be required under the bond agreement to lease the metal building only to another aviation manufacturing firm, Cunningham said.
Still worthwhile, city says
City officials insist the project has been worthwhile for Cape Girardeau even if Renaissance Aircraft goes out of business. "Part of the reason we have had trouble getting businesses to locate at the airport is that there was no facility for them to go into," Cunningham said.
That's changed with construction of the hangar, he said.
"It is not like money is going down the hole," Cunningham said.
Mayor Jay Knudtson said the city has been looking at the possibility of securing another tenant if the Renaissance deal falls through.
At this point, Knudtson said city officials want "tangible evidence" that Dearden can be successful in his business venture.
The mayor said the business venture so far has involved a lot of unfulfilled promises.
Renaissance Aircraft relocated from Eastman, Ga., to Cape Girardeau in 2001 with promises of manufacturing hundreds of planes a year and creating at least 200 new jobs. The city sold $2.6 million in bonds to construct a hangar for Renaissance 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.
After operating temporarily out of various 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 an approximately 50,000-square-foot hangar owned by the city and leased to the firm. The city also owns the land on which the hangar sits.
The city has done all it can to help the aviation firm, Knudtson said.
'We are going to succeed'
The city council on June 21 approved an amended lease agreement giving Renaissance Aircraft until Friday to make payments crucial to retiring bonds used to finance construction of the manufacturing plant and pay lease payments owed to the city.
"We have started the process. We are going to succeed," said John Dearden, Renaissance Aircraft president. He hopes to hire a few employees soon to get the plant up and running.
"The worst possible thing to happen is for us to give up," he said.
Dearden is looking at partnering with a start-up company, Luscombe Aircraft Corp. of Altus, Okla., which has plans to manufacture a different but similarly designed small airplane. Dearden said he hopes to work out a "strategic alliance" in sales, marketing and production.
He said he hopes to have some additional funding for his venture by late October.
The Oklahoma firm has a 100,000-square-foot facility and 20 employees, said Luscombe Aircraft Corp. official Bob Tooley, who formerly worked for the Cessna corporation. Tooley met with Dearden at the Renaissance Aircraft hangar last Friday to discuss a possible joint venture.
The company, effectively shut down by litigation for several years, was scheduled to start making monthly lease payments to the city on April 1. But Dearden's company so far hasn't made any payments.
Under the revised agreement, a total of over $146,000 in leftover bond proceeds will be tapped.
The surplus money is included in the total bond issue that is expected to be retired with payments from Renaissance Aircraft. "They will ultimately be paying it off," said city finance director John Richbourg.
By Friday, the following is supposed to happen:
United Missouri Bank, which handled the bonds, will reimburse Cape Girardeau over $38,000 for expenses incurred by the city to make a bond payment in April, Richbourg said. That money will come from the surplus bond proceeds.
The remaining $107,915 in the bond fund will go toward the $144,368 that Renaissance Aircraft owes for payments from April 1 to Oct. 1. Renaissance Aircraft has to come up with the $36,453 difference, Richbourg said.
In addition, Dearden's company owes nearly $24,000 to the city for site lease payments dating back to April.
The company annually is required to pay $41,000 to the city for the site lease. The $24,000 amounts to the first seven months of payments.
Richbourg said the city hasn't received any of that money yet. "Fortunately, we haven't included that in any of our budgets so far," he said.
Under the current agreement, Renaissance Aircraft is to pay $20,624 a month toward retiring the bonds. That money would cover bond payments due every six months. The repayment schedule extends over the next 17 years.
The next bond payment is due April 1, 2005. The city will have to make $168,744 in principal and interest payments at that time -- or find another tenant to pay the bill -- if Renaissance Aircraft folds, Richbourg said.
Hurt by legal battle
Renaissance Aircraft was hurt financially by a legal battle with Don Luscombe Aviation History Foundation in Arizona, which sued over Renaissance Aircraft's plan to manufacture the Luscombe 8F, a two-seat, recreational airplane whose design dates to the 1930s.
The Luscombe foundation claimed Renaissance wrongly took $8 million in equipment -- machinery, tooling jigs and dies -- needed to manufacture the plan when it relocated to Cape Girardeau.
Renaissance counter sued the foundation and an Arizona court ordered the foundation to pay $2.2 million to Renaissance Aircraft.
The foundation subsequently filed for bankruptcy. The proceedings for a time prevented the company from obtaining clear rights to make the plane.
"If we hadn't been derailed by litigation, it would have been a whole different story," Dearden said.
The litigation made it impossible for Renaissance Aircraft to secure financing for its business, the company president said.
"I plugged every nickel I had in this," said Dearden, who moved out of a rented home in Jackson and is now living in a rented house in Cape Girardeau.
Dearden said the litigation has all been cleared up. "We have taken over the foundation," he said.
Based in Chandler, Ariz., the former foundation and its six full- and part-time employees are now part of Team Luscombe, a wholly owned subsidiary of Renaissance Aircraft that is involved in restoring vintage Luscombe planes. The organizational change was made in May.
Renaissance has secured a judgment against the former president and founder of the foundation, Doug Combs. As part of the $3 million judgment, Dearden said Renaissance Aircraft has seized and sold one of Combs' airplanes.
"Now it is like we are a startup company again," Dearden said.
Renaissance Aircraft is still working to get long-term financing, he said. But he insists there's a market for the Renaissance Aircraft recreational plane, which carries a price tag of about a $90,000. That's an affordable price for an airplane, Dearden said.
Loan payments are reasonable, he said. "For $600 or $700 a month, you can own an airplane," Dearden said.
But at this point, city officials simply want to know if the venture will get off the ground.
335-6611, extension 123