AeroCentury Corp. Announces Update Regarding Revolving Credit Facility
November 01 2019 - 4:30PM
AeroCentury Corp. (NYSE American: ACY) (the “Company”), an
independent aircraft leasing company released information regarding
the impact of recent events on the Company’s revolving credit
facility and the path forward for the Company.
In late September 2019, the Company terminated
the leases for, and repossessed, three aircraft on lease to a
European passenger airline due to the carrier’s continuing
substantial lease payment defaults. The early termination of the
three leases caused the Company to fall out of compliance with the
required borrowing base covenant as of the September 30, 2019
measuring date (the “Borrowing Base Noncompliance”) under its
revolving credit facility agreement (the “Loan Agreement”) with
MUFG Union Bank, NA, as agent (“MUFG”) and the other participating
lenders (such lenders and MUFG referred to as the “Lenders”). On
October 28, 2019, the Company entered into a Forbearance Agreement
(the “Forbearance Agreement”) with the Lenders with respect to
the Borrowing Base Noncompliance. The Forbearance Agreement is
described in a Current Report on Form 8-K report filed by the
Company with the U.S. Securities and Exchange Commission (“SEC”)
today, and available on the SEC’s Edgar website as well as the
Company’s website, which report includes the full text of the
agreement as an exhibit. The Forbearance Agreement provides that
the Lenders temporarily forbear from exercising default remedies
under the Loan Agreement for the Borrowing Base Noncompliance and
certain other potential defaults under the Loan Agreement as
specified in the Forbearance Agreement (collectively the “Specified
Defaults”). The Forbearance Agreement will be in effect until
November 13, 2019 (the “Forbearance Period”), unless defaults other
than Specified Defaults occur under (i) the Loan Agreement, (ii)
any term loan indebtedness of the Company’s special purpose
subsidiaries, or (iii) the Forbearance Agreement itself.
During the Forbearance Period, the Company
intends to formulate a plan to address the non-compliance with its
Loan Agreement covenants and negotiate a longer term amendment with
its existing Lenders to address covenant compliance in the Loan
Agreement. The Company has engaged B. Riley FBR as its investment
banking advisor to assist in analyzing various strategic financial
alternatives to address its capital structure, including strategic
and financing alternatives to restructure its indebtedness and
other contractual obligations.
There can be no assurance that this review will
result in any particular outcome, or that the Company will succeed
in obtaining a longer term amendment referred to above.
“The Company remains fully able to make its
required payments of interest under the credit facility and meet
all its other financial obligations to its other creditors. We are
hopeful that the Company and its credit facility lenders will be
able to quickly come to an agreement on a course of action that
will give the Company the time and ability to resolve its
noncompliance with the credit facility agreement financial
covenants in due course,” said Michael Magnusson, President of the
Company. “We chose B. Riley FBR as our advisors because of their
wide range of expertise in loan restructuring, debt and equity
placements, recapitalizations and asset sales. We will look at all
of these options when formulating the Company’s plan going forward.
I am confident that, with the help of B. Riley FBR, the Company
will be able to present a robust plan for recovery from this
financial setback that will not only resolve the noncompliance
under the credit facility, but will also put the Company in a place
we believe is well-positioned for the future.”
This press release contains forward-looking
statements within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. All statements in this
press release other than statements that are purely historical are
forward-looking statements. Forward-looking statements in this
press release include, without limitation, statements that (a) the
Company intends to formulate a plan to regain compliance with its
Loan Agreement covenants and negotiate a longer term amendment with
the Lenders to address covenant compliance in the Loan Agreement;
(b) the Company remains fully able to make its required payments of
interest under the credit facility and meet all its other financial
obligations to its other creditors; (c) the Company and its credit
facility lenders will be able to quickly come to an agreement on a
course of action that will give the Company the time and ability to
resolve its noncompliance with the credit facility agreement
financial covenants in due course; and (d) the Company will be able
to present a robust plan for recovery from this financial setback
that will not only resolve the noncompliance under the credit
facility, but will also put the Company in a place that is
well-positioned for the future.
The Company's beliefs, expectations, forecasts,
objectives and strategies for the future are not guarantees of
future performance or events and are subject to risks and
uncertainties that could cause actual results to differ materially
from the results contemplated by the forward-looking statements,
including but not limited to (a) inability to reach an agreement
with the Lenders regarding the Company’s plan of covenant
compliance recovery and any related amendments to the Loan
Agreement in a timely manner, on terms favorable to the Company, or
at all: (b) inability to fully execute any such plan, including
without limitation, challenges and risks associated with sourcing
and raising additional capital; (c) fluctuations and other risks
associated with the Company’s cash flows, which could impact it
ability to make required payments under its debt instruments and
meet its other capital obligations; (d) the occurrence of
unanticipated events that cause further defaults under the Loan
Agreement. The forward-looking statements in this press release and
the Company's future results of operations are subject to
additional risks and uncertainties set forth under the heading
"Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Factors that May Affect Future Results and
Liquidity" in documents filed by the Company with the SEC,
including the Company's quarterly reports on Form 10-Q and the
Company's latest annual report on Form 10-K, and are based on
information available to the Company as of the date hereof and
speak only as of such date. The Company does not intend, and
assumes no obligation, to update any forward-looking statements
made in this press release, except as required by applicable law.
For these reasons, readers are cautioned not to place undue
reliance on forward-looking statements.
This press release makes reference to the SEC’s
EDGAR website and the Company’s website. Those references are
inactive textual references, and the contents of those websites are
not incorporated into this press release.
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.
Toni PerazzoChief Financial Officer(650)
340-1888
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