Current Report Filing (8-k)
March 22 2021 - 4:22PM
Edgar (US Regulatory)
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________________
FORM 8-K
__________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 16,
2021
AEROCENTURY CORP.
(Exact name of
Registrant as specified in its charter)
Delaware
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94-3263974
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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1440 Chapin Avenue, Suite 310
Burlingame, CA
94010
(Address of principal executive offices including Zip
Code)
650-340-1888
(Registrant's telephone number, including area
code)
Not
applicable
(Former name and former address, if changed since last
report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)
Securities registered pursuant to
Section 12(b) of the Act:
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Title of each
class
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Name of each exchange on which
registered
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Common Stock, par value $0.001 per
share
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NYSE American
Exchange
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Indicate by
check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging
growth company ☐
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item 1.01
Entry into a Material Definitive Agreement
Item
2.01 Completion of Acquisition or Disposition of
Assets
On March 16, 2021, AeroCentury
Corp. (the “Company”) sold its 100% percent membership
interest (the “LLC Interest”) in its Delaware limited
liability company special purpose subsidiary, ACY E-175 LLC, (the
“LLC”), which owned three Embraer E-175 Aircraft (the
“Leased Aircraft”) on lease to a U.S. regional airline.
The LLC was the sole obligor under refinancing debt for the Leased
Aircraft owed to Norddeutsche Landesbank Girozentrale, New York
Branch (“Nord”). The Nord debt was non-recourse to the
Company, but was secured by a pledge of the LLC Interest, as well
as a lien on the assets of the LLC, including the Leased
Aircraft. The sale was consummated pursuant to a Membership
Interest Purchase Agreement (the “Sale Agreement”),
between the Company and Drake Jet Leasing 10 LLC, a Delaware
limited liability company (“Buyer”), and the purchase
price for the LLC Interest was US$26.5 million, paid in the form of
the Buyer’s assumption of the entire debt of approximately
$13.3 million owed to Nord by the LLC, and a cash payment by the
Buyer to the Company of approximately $13.1 million. The
purchase price was determined by negotiations among the Company and
the Buyer following a Request for Proposal bid solicitation for the
assets. The transfer of the LLC Interest was consented
to by Nord, as secured lender, and Nord released the Company from
any remaining guaranty obligations under Nord’s refinancing
debt and interest swap obligations owed by the LLC, pursuant to a
Borrower Parent Transfer Agreement between the Company, LLC, Buyer,
Nord, Norddeutsche Landesbank Girozentrale, as swap counterparty,
and Wilmington Trust Company, as security trustee (the “Nord
Agreement”).
The
Buyer is an affiliate of Drake Asset Management Jersey Limited
(“DAMJ”), which on October 30, 2020, purchased
approximately $87.9 million of indebtedness of the Company owing
under that certain Fourth Amended and Restated Loan and Security
Agreement, dated as of May 1, 2020 (the “Loan
Agreement”), which is secured by a first priority lien held
by DAMJ covering all of the Company’s aircraft portfolio
other than the Leased Aircraft and certain other assets
specifically excluded under the Loan Agreement from such lien
(collectively the "Excluded Assets"). Pursuant
to a Side Letter No. 1 between the Company, Buyer and UMB Bank,
N.A. (the “Security Agent”), the Company applied
approximately $11 million of the LLC Interest cash sales proceeds
toward repayment of the Company’s indebtedness to DAMJ under
the Loan Agreement, and the Company retained the remaining $2.1
million of cash sales proceeds.
Following the indirect disposition
of the Leased Aircraft by way of the sale of the LLC Interest, the
Company holds in its aircraft portfolio (i) ten aircraft that are
collateral for indebtedness owed to DAMJ; and (ii) two aircraft on
lease to Kenyan lesses that are Excluded
Assets.
The
foregoing description of the Sale Agreement, the Nord Agreement,
and the Side Letter is intended to be a summary and is qualified in
its entirety by the copies of these documents set forth as Exhibits
to this Report.
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Item
9.01
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Financial Statements
and Exhibits
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(b) Pro Forma Financial
Information.
The
following unaudited pro forma financial information of the Company,
which gives effect to the transactions disclosed above, will be
filed in a subsequent amendment to this Current Report on Form
8-K:
–
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2020
–
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 2019 and the nine-month period
ended September 30, 2020
(d) Exhibits
10.1
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Membership Interest Purchase
Agreement, dated March 16, 2021 (this “Agreement”), is made by
and among AeroCentury Corp., and Drake Jet Leasing 10
LLC
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10.2
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Side Letter No. 1, dated as of March
16, 2021, by and between AeroCentury Corp., Drake Asset Mangement
Jersey Lmited, Drake Jet Leasing 10 LLC and UMB
Bank,
N.A
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10.3
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Borrower
Parent Transfer Agreement, made as of March 16, 2021 among
Aerocentury Corp.; Drake Jet Leasing 10 LLC; ACY E-175
LLC;Norddeutsche Landesbank Girozentrale, New York Branch,
Norddeutsche Landesbank Girozentrale, and Wilmington Trust Company,
A Delaware Trust Company.
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SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereto duly authorized.
Date: March
22, 2021
AEROCENTURY
CORP.
By: /s/
Harold M. Lyons
Harold M.
Lyons
Sr. Vice President & Chief Financial
Officer
Aerocentury (AMEX:ACY)
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