TIMCO Aviation Services, Inc. Announces Intent to Offer Premium for Early Conversion of Its Outstanding Senior and Junior Subord
December 21 2004 - 9:18AM
PR Newswire (US)
TIMCO Aviation Services, Inc. Announces Intent to Offer Premium for
Early Conversion of Its Outstanding Senior and Junior Subordinated
Convertible PIK Notes Into Common Stock GREENSBORO, N.C., Dec. 21
/PRNewswire-FirstCall/ -- TIMCO Aviation Services, Inc. (OTC:TMAS)
(BULLETIN BOARD: TMAS) today announced that it intends to offer to
the holders of its 8% senior subordinated convertible PIK notes due
2006 ("Senior Notes") and to the holders of its 8% junior
subordinated convertible PIK notes due 2007 ("Junior Notes", and
collectively with the Senior Notes, the "Notes") the right to
receive a 15% premium for agreeing to an early conversion of their
Notes into shares of the Company's authorized but unissued common
stock ("Common Stock"). An offering circular and related documents
with respect to the tender offer are expected to be filed by the
Company and distributed to the holders of the Notes in the near
future. The indentures relating to the Senior Notes and the Junior
Notes provide that unless the Senior Notes and the Junior Notes are
redeemed prior to their maturity, the Senior Notes (including all
previously issued PIK interest and all accrued but unpaid interest)
will automatically convert at their maturity into 270.3 million
shares of Common Stock and the Junior Notes (including all
previously issued PIK interest and all accrued but unpaid interest)
will automatically convert at their maturity into 9.3 million
shares of Common Stock. Based on available information, the Company
does not anticipate that the Notes will be redeemed prior to their
maturity and, as a result, the Company anticipates that the Notes
will automatically convert into Common Stock at their maturity. If
the early conversion were to occur on December 31, 2004, holders of
$1,000 in principal amount of Senior Notes, including PIK interest
thereon and any accrued but unpaid interest, who elected to convert
their Notes in the offer would receive the approximately 2,164
shares of Common Stock that they would otherwise have received upon
conversion of their Senior Notes into Common Stock at their
maturity (December 31, 2006), plus a conversion premium equal to
approximately 324 shares of Common Stock. If the early conversion
were to occur on December 31, 2004, holders of $1,000 in principal
amount of Junior Notes, including PIK interest thereon and any
accrued but unpaid interest, who elected to convert their Notes in
the offer would receive the approximately 1,965 shares of Common
Stock that they would otherwise have received upon conversion of
their Junior Notes into Common Stock at their maturity (January 2,
2007), plus a conversion premium equal to approximately 294 shares
of Common Stock. It is not expected that the offer will require any
minimum number of Notes to be tendered, and holders of Notes who
elect not to convert their Notes in the offer will continue to hold
their Notes, which will automatically convert by their terms into
Common Stock at their maturity without the payment of any premium.
Lacy Harber, the Company's majority shareholder and the holder of
$20.3 million of the outstanding Senior Notes (approximately 17% of
the outstanding Senior Notes), has advised the Company that he
intends to convert his Notes in the offer. Further, Mr. Harber, who
holds a warrant to purchase, for nominal consideration, that number
of shares of the Common Stock which is equal to 30% of the
Company's outstanding common stock (on a fully diluted basis), has
advised the Company that he will agree that his warrant shall not
be applied to the premium shares issued in the tender offer. In
that regard, Mr. Harber has advised the Company that he intends to
exercise his warrant with respect to the shares outstanding at the
closing of the offer, excluding any premium shares. If less than
all of the Notes are tendered, Mr. Harber will at the closing of
the offer receive a new warrant to acquire additional shares equal
to 30% (on a fully-diluted basis) of the shares issuable on the
automatic conversion of the untendered Notes at their maturity. As
such, Mr. Harber will only receive from the full exercise of his
warrant the same number of shares that he would have otherwise
received had the Notes automatically converted into Common Stock at
their maturity and had he exercised his warrant immediately
thereafter. Assuming all of the Notes are tendered in the offer,
following the closing of the offer and the exercise of the warrant,
Mr. Harber, who currently beneficially owns approximately 72% of
the Company's outstanding common stock, will beneficially own
approximately 44% of the Company's outstanding common stock. If the
holders of all of the outstanding Senior Notes and Junior Notes
agree to an early conversion of their Notes in accordance with the
tender offer, the Company will have 486,562,978 shares of Common
Stock outstanding, including an aggregate of 41,939,332 premium
shares. At September 30, 2004, the Company had a negative net worth
of $95.6 million. Had the Notes been converted into Common Stock at
that date, and the warrant held by Mr. Harber exercised in full, on
a pro-forma basis the Company would have had a positive net worth
of $23.7 million. The Company, based on currently available
information, believes that the Notes will convert into Common Stock
at their maturity. The Company believes that cleaning up its
capital structure at this time will also allow the Company to
better take advantage of opportunities that may be available in its
marketplace over the next few years and allow the Company to take
steps to create a more efficient market for its Common Stock. This
press release is not an offer or solicitation for the early
conversion of the Notes into Common Stock, which can only be made
on the terms and subject to the conditions described in the
Offering Circular and related documents. At the time the offer is
commenced, the Company will file a Tender Offer Statement
(including an offering circular, a related letter of transmittal
and other offer documents) with the U.S. Securities and Exchange
Commission ("SEC"). The Tender Offer Statement will be made
available to all Noteholders at no expense to them. The Tender
Offer Statement will also be available at no charge at the SEC's
website at http://www.sec.gov/ . The Tender Offer Statement will
contain important information that should be read carefully before
any decision is made with respect to the offer. TIMCO Aviation
Services, Inc. is among the world's largest providers of fully
integrated aviation maintenance, repair and overhaul (MR&O)
services for major commercial airlines, regional air carriers,
aircraft leasing companies, government and military units and air
cargo carriers. The Company currently operates four MR&O
businesses: TIMCO, which, with its four active locations
(Greensboro, NC, Macon, GA, Lake City, FL and Goodyear, AZ), is one
of the largest independent providers of heavy aircraft maintenance
services in the world; Aircraft Interior Design and Brice
Manufacturing, which specialize in the refurbishment of aircraft
interior components and the manufacture and sale of aftermarket
parts and new aircraft seats; TIMCO Engineered Systems, which
provides engineering services both to our other MR&O operations
and to our customers; and TIMCO Engine Center, which refurbishes
JT8D engines and performs on-wing repairs for both JT8D and CFM-56
series engines. Visit TIMCO online at http://www.timco.aero/ . This
press release contains forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties, which
may cause the Company's actual results in future periods to differ
materially from forecasted results. A number of factors, including
satisfaction of the conditions to completion of the tender offer
contained in the Tender Offer Statement and those identified in the
Company's Annual Report on Form 10-K for the year ended December
31, 2003 and its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004, could adversely affect the Company's
ability to obtain these results. Copies of the Company's filings
with the U.S. Securities and Exchange Commission are available from
the SEC or may be obtained upon request from the Company. The
Company does not undertake any obligation to update the information
contained herein, which speaks only as of this date. DATASOURCE:
TIMCO Aviation Services, Inc. CONTACT: Roy T. Rimmer, Jr., Chairman
& Chief Executive Officer, or Fritz Baumgartner, Vice President
and Corporate Controller, or Kevin Carter, Vice President-Planning
and Treasurer, all of TIMCO Aviation Services, Inc.,
+1-336-668-4410 Web site: http://www.timco.aero/
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