By Jeff Manning of The Oregonian staff
Lance Neibauer sold his first finished airplane Sept. 26, an enormous victory for a man who for years has struggled to build a small-aircraft manufacturing operation from scratch.
But Neibauer’s first sale also could be his last.
Neibauer claims his Bend-based company, Pacific Aviation Composites USA, has been put in dire financial straits by an investor who failed to produce a promised $6.9 million. Neibauer sued the investor in U.S. District Court in Portland on Wednesday alleging fraud, conspiracy and breach of contract.
Sounds like straightforward breach of contract. But it’s not, because Lance Neibauer is suing Malaysia.
Yes, the country.
Neibauer is seeking more than $50 million in damages, claiming officials of the Malaysian Ministry of Finance reneged on a promise to produce the additional capital.
Neibauer and company officials “repeatedly informed the Malaysian group that it was unlikely (Pacific Aviation) could remain in operation without the promised money,” the complaint states.
Malaysia has yet to file a response to the suit. According to federal court records, Malaysia hasn’t selected a local attorney to represent it. A spokesman said the nation’s consul general’s office in Los Angeles wasn’t aware of the suit and had no comment.
Neibauer didn’t return phone calls Friday seeking comment about the suit or how the Malaysian relationship came about.
Neibauer relocated from California to Redmond in the early 1990s. His company sold aircraft kits, which customers assembled into functional small planes. The entrepreneur decided his company should build the aircraft itself and went through the yearslong process of obtaining Federal Aviation Administration approval to design, build and sell the Columbia 300, a four-seat craft made of a light composite material.
But it takes money to build an aircraft production facility. In 1993 and 1994, Neibauer met with the Malaysian Finance Ministry and persuaded officials to back the company. In return, Neibauer gave up 50 percent of the company and two seats on its four-member board of directors.
Along the way, the state offered incentives to keep the company in Central Oregon. It paid about $1.5 million for improved roads, water and sewer service to the company’s headquarters, which eventually moved from Redmond to Bend. The Oregon Economic Development Department also granted Pacific Aviation $300,000 to train its work force.
“You take a community like Bend, we don’t have a large inventory of aircraft assembly skills,” said Robert Raimondi, the department’s regional development officer in Central Oregon.
Pacific Aviation says it has orders worth $30 million for more than 100 of its Columbia 300s.
But, during the fall, the company ran short on operating capital, which prompted a search for additional investors. The company claimed it had a deal with a new investor for $9 million. But the Malaysians, allegedly unhappy at the prospect of their stake being diluted, offered $6.9 million more.
Pacific Aviation consented. But the money never arrived.
In mid-February, according to the complaint, the Malaysians allegedly stated they would produce the money only if they were granted an additional seat on the board of directors, which would give them control of the company.
Rather than give up his company, Neibauer went to court.
Has anyone noticed Lancair’s severe financial problems?
Apparently, Their far eastern investor reneged on promisses to invest another $6 - $7.0 million and now they are in a tight place.
Thast sort of makes Dennis’s question even more relevant.
From everything I have heard, they are doing OK, but most of that comes either directly or indirectly from the factory. any thoughts?