Current Report Filing (8-k)
April 02 2021 - 6:05AM
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 29,
2021
AEROCENTURY CORP.
(Exact name of Registrant as specified in its charter)
Delaware
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001-13387
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94-3263974
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(State of Incorporation)
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(Commission File
No.)
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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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Trading Symbol
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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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ACY
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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
On
March 29, 2021, the Company entered into an Asset Purchase
Agreement (“Stalking Horse Agreement”) with Drake Asset
Management Jersey Limited (“DAMJ”), for the purchase of
certain aircraft assets of the Company, subject to better and
higher offers.
The
Stalking Horse Agreement was entered into in conjunction with the
filing by the Company of a voluntary petition for relief under
chapter 11 of title 11 (“Chapter 11”) of the United
States Code (the “Bankruptcy Code”) in the United
States Bankruptcy Court for the District of Delaware (the
“Court”), commencing the Chapter 11 case under
In re AeroCentury Corp. et
al. (Case No. 21-10636) (the “Chapter 11
Case”).
DAMJ is
also the holder of approximately $83.2 million of indebtedness
(“Secured Obligations”) of the Company owing under that
certain Fourth Amended and Restated Loan and Security Agreement,
dated as of May 1, 2020, as amended to date (the “Loan
Agreement”).
The
Company has requested the Court
approve certain bidding procedures with respect to an auction sale
(“Auction Sale”) for the Company’s assets in
order to fund repayment of its indebtedness to DAMJ, as its sole
secured lender. The
consummation of a sale of assets in the Auction Sale on terms as
set forth in the Stalking Horse Agreement, or pursuant to higher
and better offer, is expected to resolve in full the
Company’s Secured Obligations to DAMJ.
Following
is a summary of the principal terms and conditions of the Stalking
Horse Agreement:
●
Assets Covered. The Stalking Horse
Agreement covers ten aircraft assets and related lease rights (such
aircraft abnd lease rights collectively referred to as the
“Collateral Assets”), over which DAMJ holds a first
priority lien that secures the Secured Obligations.
●
Purchase Price. The aggregate
consideration for the purchase of the Collateral Assets is an
amount equal to the amount of the outstanding Secured
Obligations.
●
Sale Order Approval Required. The
mutual obligations for the purchase and sale of the Collateral
Assets is subject to the entry of an order by the Bankruptcy Court
authorizing the purchase transaction as the best and highest offer
available with respect to disposition of the Collateral
Assets.
●
Excluded Assets. Certain assets are not
being sold pursuant to the Stalking Horse Agreement
(“Excluded Assets”), including two aircraft on lease to
Kenyan lessees, and certain aircraft and an engine that are being
parted out under consignment arrangements, which Excluded Assets
shall remain free and clear of DAMJ claims, if and when the sale
pursuant to the Stalking Horse Agreement or other higher and better
offer is consummated.
●
Economic Closing Date Allocation. Lease
revenue received with respect to the Collateral Assets shall be
allocated based on a February 1, 2021 economic closing date (the
“ECD”). Any lease revenue received by the Company for
periods prior to the ECD shall be the property of the Company. Any
lease revenue received that relates to any period after the ECD
(“Post-ECD Proceeds”) shall be held by the Company for
the benefit of DAMJ and remitted to DAMJ pursuant to terms of the
cash collateral order entered into in connection with the Company's
Chapter 11 Case.
●
Assumed Liabilities. DAMJ shall assume
liability for (a) any amounts required to be paid by the Company
pursuant to section 365 of the Bankruptcy Code in connection with
the assumption and assignment of the Assumed Leases; (b) all costs
of obtaining necessary consents to assignment of the Assumed Leases
(to the extent not assignable pursuant to contract or applicable
law); (c) all of the legal fees payable to lessees under the
Assumed Leases incurred in connection with legal review and
negotiation of the lease novation or assignment documents for the
Assumed Leases, and 50% of the Company’s legal fees for such
legal review and negotiation; (d) sales, use, documentary,
transfer, property, bulk, stamp, ad valorem or similar tax imposed
on the assignment and transfer Collateral Assets, and any related
penalties, or interest incurred; (e) reimbursements payable to a
lessee upon completion of specific qualified maintenance projects,
as defined and specified under any Assumed Lease; and (f) any
unsatisfied liabilities with respect to certain programs that the
Company maintains in connection with its leasing business in
respect of the Assumed Leases.
●
Release of Secured Lender Claims on Company
Assets. On the date that the transfer of title to all
Collateral Assets shall have been completed, the Secured
Obligations shall be deemed satisfied in full and canceled, and
DAMJ shall release any claims it may otherwise have in: (a) any
cash held in the Company’s bank accounts that are not
Post-ECD Proceeds; (b) any proceeds received by the Company under
any consignment contract with respect to Excluded Assets; (c) all
assets of the Company other than the Collateral Assets; and (d) any
proceeds of sale or other funds received in respect of the
foregoing items listed in (a)-(c).
The
foregoing description of the Stalking Horse Agreement is intended
to be a summary and is qualified in its entirety by the copy of
such agreement set forth as an Exhibit to this Report.
(d) Exhibits
10.1
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Asset Purchase Agreement, dated March 26, 2021, is made by and
among AeroCentury Corp., and Drake Asset Management Jersey
Limited
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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: April 1, 2021
AEROCENTURY CORP.
By: /s/ Harold M.
Lyons
Harold M. Lyons
Sr.
Vice President & Chief Financial Officer
Aerocentury (AMEX:ACY)
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