07 March 2012

Epic Aircraft Bought Out Again

One of the subjects that I have tried to cover here in this blog is the increasing foreign ownership of the North American aerospace industry.

One of the companies that became foreign-owned in 2010 is Epic Aircraft and there was another twist in this story recently.

Epic was started by Rick Schrameck in 2004 in Bend, Oregon, to build the Epic LT single turboprop cabin airplane as a kit, with factory assistance available. Schrameck intended to certify the LT and also to produce a large range of kit and certified turboprops and jets, but he never got beyond delivering a few LT kits. In August 2009 the landlord seized the plant for non-payment of rent. There were, of course, many reports of "financial irregularities". In September of 2009 founder Schrameck was fired by the company's board and the company entered Chapter 11 reorganization and when that wasn't successful, finally Chapter 7 liquidation.

An irate group of seven kit owners who had been building their aircraft at the plant formed the LT Builders Group and made a bid for the company. So did the Chinese government, as the China Aviation Industry General Aircraft Co. Ltd, which announced that they planned to move the operation to China. In the end the court awarded ownership to both jointly, with the company ordered to remain in Bend.

The new venture seemed to be working out okay and CEO Doug King announced in the summer of 2010 that production was on and that they were taking orders.

Then this week came the announcement that Epic had been sold to Engineering LLC, a Russian company.

The Epic Aircraft press release is, of course, full of all the right positive-sounding noises, like "The move allows Engineering LLC to leverage Epic Aircraft’s leading kit aircraft manufacturing knowledge and will allow Epic to expand its services and offerings to a more global audience." But there are far more questions than answers here.

King is still the CEO, so the LT Builders Group influence seems to still be there, but what happened to the Chinese involvement? Did they decide that it was a poor investment? Did they not get along with the US partners? Was the order to leave everything in Bend not going to work for them? There is no mention of them at all in any of the stories on the Russian purchase. The Chinese government has been very methodical in buying North American aerospace companies, so if they sold out their portion there was probably a very good reason for it.

So what is in store for Epic? I suppose time will tell. I have been looking for even one example of a foreign company buy-out where Russian ownership has worked out well and I am still looking. Perhaps Epic will be that sterling example?

Further reading:

* AVweb story
* Portland Business Journal story
* Wikipedia


Anonymous said...

Rick Shramick is in China pulling down six figures, it just shows that you can still fool some of the people even if you have to go to China to do it. Certification is not cheap, 30+ millon and you would be lucky if it took you 3 years.

Adam Hunt said...

Just a note: AVweb is still working on getting some more details on this story, so hopefully that will answer the questions I have raised in this article.

Anonymous said...

AVIC, the Chinese aircraft company was shunned from the outset by King et al. They were forced to purchase one of the builder's hulls (and employ Schrameck) in order to obtain the specs for the plane design they had paid for. They then turned their attention to the purchase of Cirrus.

It appears that Epic has suffered the exact fate, under King, that he threatened if the Chinese bid was successful; the company is floundering under ownership of some shadowy foreign group.

Two things are for certain:
1) King, like Schrameck will come out of this financially intact.
2) Cirrus aircraft owners are in far better hands their Epic counterparts, thanks to the greed of guys like Schrameck and King.