Current Report Filing (8-k)
November 01 2019 - 4:37PM
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): October 28,
2019
AEROCENTURY
CORP.
(Exact name of Registrant as specified in its charter)
Delaware
|
94-3263974
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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000-1036848
(Commission File Number)
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 theExchange Act (17 CFR 240.13e-4(c)
Securities
registered pursuant to Section 12(b) of the Act:
|
|
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
|
NYSE American
Exchange
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Securities
registered pursuant to Section 12(g) of the Act: None
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
Forbearance
Agreement with Credit Facility Lenders
In late September, AeroCentury Corp. (the
"Company") repossessed four aircraft leased to one of its customers
due to substantial payment arrearages and other lease defaults, and
the customer subsequently entered into insolvency
proceedings. Three of the repossessed aircraft secured the
Company's obligations under the
Third Amended and Restated Loan and Security Agreement (the "Loan
Agreement") between MUFG Union Bank, N.A., as
agent and lender ("MUFG") and California Bank and Trust, a division
of Zions Bancorporation (fka ZB, NA) dba California Bank and Trust,
Columbia State Bank, Umpqua Bank, and U.S. Bank National
Association (collectively with MUFG, referred to as the
"Lenders"). As a result of early
termination of the leases, the Loan Agreement required the Company
to recalculate the contribution of the three aircraft to the
collateral base securing the Loan Agreement indebtedness, and as a
result, the Company was not in compliance with the Loan Agreement
borrowing base covenant as of the September 30, 2019 measuring date
("Borrowing
Base Noncompliance"). On October 15,
2019, MUFG delivered a Reservations of Rights Letter (the
"Reservation Letter") to the Company which provided formal notice
to the Company of certain "Specified Defaults" under the Loan
Agreement, including the Borrowing Base Noncompliance and certain
other potential Loan Agreement covenant defaults listed in the
letter. The Reservation Letter did not include a triggering event
that caused acceleration of the Loan Agreement
indebtedness.
On October 28,
2019, the Company and two of its subsidiary corporations, JetFleet
Holding Corp. and JetFleet Management Corp., entered into a
Forbearance Agreement (the "Forbearance Agreement") with the
Lenders and MUFG Bank LTD ("MUFG LTD") with respect to the Loan
Agreement and the related interest rate swap agreements between
MUFG LTD and the Company for certain of the Loan Agreement
indebtedness (the "Swap Contracts"). The
Forbearance Agreement provided that the Lenders (i) shall
temporarily forbear from exercising remedies under the Loan
Agreement that might be triggered by the Specified Defaults, and
(ii) shall grant a one-time waiver of a provision under the Loan
Agreement, which waiver permitted the Company to rollover an
existing LIBOR tranche of the loan to a new LIBOR-based loan,
despite the existence of the Specified Defaults. It further
provided that MUFG LTD, as swap counterparty to the Swap Contracts,
shall forbear temporarily from exercising any termination rights
under the Swap Contracts that might be triggered by the Specified
Defaults.
The
Forbearance Agreement expires on the earlier of (i) November
13, 2019; (ii) the occurrence of a default under the Loan Agreement
other than the Specified Defaults; (iii) exercise of default
remedies by the lender under certain term loan agreements entered
into by special purpose subsidiaries of the Company; or (iv)
a default by the Company under the terms of the Forbearance
Agreement. The Forbearance Agreement requires additional
reporting on a biweekly basis of the Company's week-by-week cash
flow projections and variances. In consideration of the
Forbearance Agreement, the Company paid the Lenders a Forbearance
Fee of $181,250.
The foregoing
description of the Forebearance Agreement is qualified in its
entirety by reference to the copy of the Forebearance Agreement
filed as Exhibit 10.1 hereto.
Item 7.01 Regulation FD
Disclosure
On November 1,
2019, the Company issued a Press Release regarding the status of
the Company's noncompliance with the Loan Agreement and its plan to
regain compliance. A copy of the Press Release is attached to
this Report as Exhibit 99.1.
In
accordance with General Instruction B.2 of Form 8-K, the
information furnished pursuant to Item 7.01, including Exhibit 99.1
furnished herewith, shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), nor shall it be deemed
incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference in such a
filing.
Item
9.01
(d)
Exhibits
10.1
|
Forbearance Agremeent between the Company;
JetFleet Holding Corp.; JetFleet Management Corp.; MUFG Union
Bank, N.A., as Administrative Agent and Lender; and Zions
Bancorporation, N.A. (fka ZB, N.A.) dba California Bank and
Trust, Columbia State Bank, Umpqua Bank, U.S. Bank National
Association, and Columbia State Bank, as Lenders; and MUFG Bank
LTD, as Swap Counterparty, dated October 28,
2019
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99.1
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Form of Press Release, dated November 1,
2019, issued by the 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: November 1,
2019
AEROCENTURY
CORP.
By: /s/ Toni M.
Perazzo
Toni M.
Perazzo
S.V.P - Finance &
Chief Financial Officer
Aerocentury (AMEX:ACY)
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