AeroCentury Corp. Announces Update Regarding Loan Facility
November 12 2020 - 08:00PM
AeroCentury Corp. (NYSE American: ACY) (the "Company"), an
independent aircraft leasing company, released information relating
to its indebtedness under its loan facility with MUFG Union Bank,
N.A., as Agent.
On October 30, 2020, Drake Asset Management
Jersey Limited ("Drake"), purchased all of the indebtedness of
AeroCentury Corp. (the "Company") held by the lenders (the "MUFG
Lenders") under the Fourth Amended and Restated Loan and Security
Agreement dated as of May 1, 2020 (the "Loan Agreement"), totalling
approximately $87.9 million, as well as all of the Company's
indebtedness to MUFG Bank, Ltd. (approximately $3.1 million) that
arose from the termination of interest rate swaps entered into with
respect to such Loan Agreement indebtedness. The purchase and
sale was consented to by the Company pursuant to a Consent and
Release Agreement of Borrower Parties, entered into by the Company
and its subsidiaries (the “Consent”). The closing of this
debt purchase transaction satisfied the requirement under the Loan
Agreement for the Company to execute a strategic alternative
("Strategic Alternative") with respect to the MUFG Loan
indebtedness satisfactory to the MUFG Lenders.
On the same day, the Company entered into
Amendment No. 1 to the Loan Agreement ("Amendment No. 1") with
Drake and UMB Bank, N.A., the replacement Administrative Agent
under the Loan Agreement, to amend the Loan Agreement as
follows:
- Deferral of the cash component of the interest payments due
under the Loan Agreement, commencing with the payments due for
March 2020, and continuing on each consecutive month thereafter,
which deferred interest is to be capitalized and added to the
principal balance of the indebtedness on each respective interest
payment due date, until such time as the indebtedness is repaid.
- Deletion of the requirement for the Company's execution of a
Strategic Alternative and of the milestones therefor;
- Deletion of the requirement for the Company's maintenance of a
restricted account held with an MUFG Lender to hold aircraft sales
proceeds pending application toward the Loan Agreement
indebtedness;
- Replacement of references to "MUFG Union Bank, N.A.," with
"UMB, Bank, N.A.", the new Administrative Agent under the Loan
Agreement;
- Requirement of approval by Drake for any "Material
Amendments" to leases for the collateral, defined as any amendment
of, or waiver or consent under, any lease involving a modification
of lease payments, any reduction in, or waiver or deferral of,
Rent, a modification to any residual value guaranty, any
modification that adversely affects the collateral or the rights
and interests of the lender and/or administrative agent in the
collateral, any reduction of any amounts payable to any lender or
Agent under any indemnity, or any change to the state of
registration of aircraft collateral; and
- Deletion of certain financial reporting requirements and
changes to required frequency of certain other surviving reporting
requirements.
The full text of each of Consent and the
Amendment No. 1 are included as exhibits to a Current Report on
Form 8-K report regarding these agreements that was filed on
November 2, 2020 (the November 2 8-K”) by the Company with the U.S.
Securities and Exchange Commission ("SEC"), and available on the
SEC’s Edgar website as well as the Company’s website. The foregoing
description of the Amendment No. 1 is intended to be a summary and
is qualified in its entirety by the copy of Amendment No. 1 filed
as Exhibit 10.2 to the November 2 8-K.
The Company and Drake are currently engaged in
discussions regarding the satisfaction and discharge of the Loan
Agreement indebtedness. There can be no assurance that the Company
and Drake will be able to reach a mutual agreement regarding
satisfaction and discharge, or that these discussions will result
in any particular outcome.
About Drake: Drake is a
specialist investment business focused on the regional aviation
sector. Drake has investments across a wide range of regional
aircraft types. Falko Regional Aircraft Limited (“Falko”)
acts as the servicer to Drake and Falko is engaged in discussions
with the Company on behalf of Drake regarding the indebtedness.
About AeroCentury: AeroCentury
is an independent global aircraft operating lessor and finance
company specializing in leasing regional jet and turboprop aircraft
and related engines. The Company's aircraft and engines are leased
to regional airlines and commercial users worldwide.
Harold M. LyonsChief Financial Officer(650)
340-1888
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