No taxpayer millions for Piper Aircraft this year
Piper Aircraft has announced it will not seek millions in taxpayer money it never stood a chance of receiving.
Meanwhile, the stock of its parent company, American Capital, sank to a new all-time low on Monday, closing at $2.88 a share. The company, which for some time has been at risk of running afoul of its debt covenants, is now trading below net asset value.
Piper put out a release on Dec. 23 saying that company executives, officials from Indian River County and the state’s Enterprise Florida met on Dec. 17 to discuss an upcoming $10.6 million payment due on Jan. 1, 2009 from state and county funds if Piper met specific capital improvement and hiring targets.
The press release goes on, “Piper notified those officials that because of the weakening global economy, the company will not seek the next payment ($10.667 million — $4 million from Indian River County and $6.667 million from the state of Florida) due under the terms of the agreement until business conditions warrant an acceptable time to recommence payments.”
However, according to terms of the deal that was negotiated this year to keep Piper in Vero Beach, the company had to hire 152 full-time employees to grow its workforce to 1,166 and have spent $10.6 million in capital improvements by the end of 2008. If the company didn’t meet those targets, it would not be eligible for the money.
Piper, which has been hard hit by the worldwide economic downturn, has been laying off employees since the fall and claimed in the press release it “employs approximately 1,000 employees and currently has an annual payroll of $50 million.”
It is difficult to verify those numbers as the company has refused to answer questions on the subject -– by phone or by email – but a spokesman did acknowledge to Florida Today that there had been a “handful” of layoffs. Vero Beach 32963 sources place the number closer to 100.
In the release, Piper said it “feels that its actions will allow it to emerge as a stronger more vibrant company once the economy revives.” The company did not offer other steps to ensure its viability, and has not indicated if the workforce reduction involves front office personnel.
What is also unclear is if the extension of the due date for the $10.6 million payment will be for one year or two. Under terms of the contract, either side had the right to ask for a one-time economic hardship extension for up to two years. But Piper, the county’s largest employer, can ill afford to miss the economic targets when the contract is in force.
According to the deal to obtain the $32 million in public funds, if the company missed one of its economic targets by more than 80 percent it must return oneseventh of the money it has been paid, plus interest. (The one-seventh figure represents one year of the seven-year deal.) Piper has already received $10.7 million from the state and county.
Hard as it is to determine what really is happening at Piper, since the company appears to believe that by giving the media no facts, no stories will be written, it is equally difficult to assess the situation with parent company American Capital.
After mark-to-market accounting forced American Capital to take $698 million in depreciation losses for the last quarter, it withheld paying dividends in an effort not to trigger its debt covenants. But the stock price continues to decline, now down 93 percent from its 2008 high of $37.86, and investors are increasingly questioning its future.
Local officials continue to hope for the best , however, for Piper, which stated that despite the turmoil, it plans on remaining in Vero Beach.
“The company also reaffirmed its commitment to stay in Indian River County and continue to strengthen its ties and contributions to the community,” the statement read. “Piper will review the details of Project Osprey activities (the building of the new PiperJet) with the Indian River County Board of Commissioners after the first of the year and greatly appreciates the support of the community and state of Florida.”