SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of (Date of earliest event reported):
August 9,
2021
AEROCENTURY CORP.
(Exact name of Registrant as specified in its charter)
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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 8.01 Other Events
On
August 9, 2021, in the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”) in the
Chapter 11 case of AeroCentury Corp. (“AeroCentury”) and its two
U.S. subsidiaries, JetFleet Management Corp., and JetFleet Holding
Corp. (the three corporations collectively referred to as the
“Debtors”), the Debtors
filed notice with the Bankruptcy Court that an investment term
sheet (the “LOI”) had been executed
by AeroCentury.with Yucheng Hu, Hao Yang, Jing Li, Yeh Ching and Yu
Wang, and identifying such individuals as “Plan
Sponsor” chosen by the Debtors to provide equity investment
of US$11 million into AeroCentury through the purchase of Common
Stock from AeroCentury, as part of the Debtors’ plan of exit
from Chapter 11.
The LOI
is subject to the execution of definitive documentation in form and
substance reasonably acceptable to the Debtors and the Plan Sponsor
and the approval of the Bankruptcy Court.
Following
is a summary of the principal terms of the LOI. This summary is
qualified in its entirety by reference to the LOI set forth as
Exhibit 99.1 to this Report.
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Deposit. Following execution of the LOI,
the Plan Sponsor shall deposit US$1.65 million (“Deposit”) into an escrow
account to be identified and established by the Debtors. On the
effective date of the Combined Disclosure Statement and Plan (the
“Effective
Date”) and the closing of the Plan Sponsor’s
purchase of AeroCentury Common Stock (“New ACY Shares”), the
Deposit will be released to AeroCentury and will be applied toward
Plan Sponsor’s purchase price for the New ACY
Shares.
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Plan Sponsor Equity Investment. The Plan
Sponsor and the Debtors shall negotiate and enter into an agreement
(“Plan Sponsor
Agreement”) for the terms and conditions of the
issuance of the New ACY Shares. The Plan Sponsor Agreement shall
provide that, at closing, AeroCentury will issue 2,894,737 New ACY
Shares to the Plan Sponsor at a purchase price equal to $3.85 per
share, for an aggregate purchase price of US$11 million. The New
ACY Shares issuance would result in post-issuance pro forma
ownership percentages of the AeroCentury common stock of (a) 64.89%
held by the Plan Sponsor, and (b) 35.11% held by existing
shareholders of AeroCentury on the Effective Date (the
“Legacy ACY
Shareholders”).
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Refundability of the Deposit. In the
event the purchase of the New ACY Shares does not close as a result
of the Plan Sponsor seeking to modify the terms subsequent to
execution of the LOI or the Plan Sponsor’s failure to comply
with the terms of Plan Sponsor Agreement, the Deposit will be
forfeited to AeroCentury. In the event the purchase of the New ACY
Shares does not close as a result of Debtors’ failure to
comply with the terms of the Plan Sponsor Agreement or the failure
of the conditions precedent set forth in the Plan Sponsor
Agreement, the Deposit will be refunded to Plan Sponsor. If the
Bankruptcy Court or any regulatory authority having the authority
to block the consummation of the purchase of the New ACY Shares
does not approve of the purchase of the New ACY Shares on the terms
set forth in the LOI, the Deposit will be refunded to Plan
Sponsor.
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Breakup Fee. If, after the LOI has been
executed by the Debtors and Plan Sponsor, the Bankruptcy Court
accepts and approves an exit financing transaction for AeroCentury
with a party other than the Plan Sponsor (an “Alternative
Transaction”), AeroCentury shall pay Plan Sponsor,
upon the closing of such Alternative Transaction, a breakup fee
equal to US$1,000,000, in addition to the return of the
Deposit.
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New Capital Structure for JetFleet Holding
Corp. (“JHC”). On the Effective Date, the
following transactions relating to JHC equity ownership shall be
executed:
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Cancellation of ACY Equity in
JHC. All outstanding stock of JetFleet Holding Corp.
(“JHC”) currently held 100% by its parent, AeroCentury,
shall be canceled.
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JHC Common Stock Issuance to Plan
Sponsor and JHC Management. Plan Sponsor shall acquire
35,000 shares of common stock of JHC,
and certain employees of JHC (“JHC
Management”) that will be
appointed to continue the legacy aircraft leasing business of
AeroCentury through JHC shall acquire 65,000 shares of common stock
of JHC. All shares of common stock of JHC will be purchased at a
price of USD$1 per share.
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JHC Series A Preferred Stock Issuance
to AeroCentury. AeroCentury will use USD$2 million of its
proceeds from the Plan Sponsor’s purchase of New ACY Shares
to purchase new JHC Series A Preferred Stock from JHC. The JHC
Series A Preferred Stock shall carry a dividend rate of 7.5% per
annum, shall be non-convertible and non-transferable, shall be
redeemable by JHC at any time, but shall only be redeemable by
AeroCentury after 7 years. The JHC Series A Preferred Stockholders
shall in the aggregate constitute 51% of the voting equity of JHC,
voting as a single class together with the outstanding JHC Common
Stock.
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Distribution of Trust Interest in JHC
Series B to Legacy ACY Shareholders. A trust (“Legacy Trust”) will be
established for the benefit of the Legacy ACY Shareholders, and JHC
will issue new JHC Series B Preferred Stock to the Legacy Trust.
The JHC Series B Preferred Stock issued to the Legacy Trust will
have an aggregate liquidation preference of USD$1, non-convertible,
non-transferable, non-voting, will not pay a dividend, and will
contain a mandatory, redeemable provision. The JHC Series B
Preferred Stock will be redeemable for an aggregate amount equal to
(i) USD$1,000,000, if the JHC Series B Preferred Stock is redeemed
after the first fiscal year for which JHC reports positive EBITDA
for the preceding 12-month period, or (ii) USD$0.001 per share, if
the JHC Series B Preferred Stock is redeemed prior the first fiscal
year for which JHC reports positive EBITDA for the preceding
12-month period.
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Cash Distribution to Legacy ACY
Shareholders. As soon as practicable following the Effective
Date, AeroCentury will make a cash dividend distribution to the
Legacy ACY Shareholders in the aggregate amount of US$1,000,000,
funded from the purchase price paid by Plan Sponsor for the New ACY
Shares.
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Board Make-up Following Sponsor
Investment. Following the Effective Date, AeroCentury will
have a Board of Directors initially consisting of five (5) members,
which will consist of (i) three directors designated by Yucheng Hu
(the “Lead Investor”) and (ii) two directors to be
mutually agreed upon by the Lead Investor and the current incumbent
Board of Directors.
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Item 9.01
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Financial
Statements and Exhibits
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(d) Exhibits
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99.1
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Investment Term Sheet, dated July 9, 2021, between AeroCentury
Corp. and Yucheng Hu, as Lead Investor.
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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: August 10, 2021
AEROCENTURY CORP.
By: /s/
Harold M. Lyons
Harold M. Lyons
Sr.
Vice President & Chief Financial Officer