Air T, Inc. (NASDAQ:AIRT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On December 11, 2020, Airco 1, LLC (“Airco 1”), (a 50%-owned subsidiary of Airco, LLC (“Airco”), which is a 50%-owned subsidiary of Air T, Inc. (the “Company”) and Park State Bank (“PSB”), entered into a Main Street Priority Loan Facility Term Loan Agreement (the “Loan Agreement”) and related documentation for a loan (the “Main Street Loan”) in the aggregate amount of $6,200,000 for which PSB served as lender to the Main Street Priority Loan Facility as established by the Board of Governors of the Federal Reserve System Section 13(3) of the Federal Reserve Act. On December 19, 2020, the Company learned that the Main Street Loan had been approved. The loan transaction was completed on December 22, 2020. The loan proceeds are to be used to refinance indebtedness of Airco 1, LLC.
The principal terms of the Main Street Loan are: (a) interest on the loan accrues at a floating rate of LIBOR plus 3.00% and interest is payable commencing December 11, 2021; (b) 15% principal payments plus 15% of the amount of capitalized interest are due on December 11, 2023, and 2024, with the remainder due on the loan maturity date – December 11, 2025; (c) the loan is not guaranteed; and, (d) a 2% origination fee was paid on funding of the loan. The loan contains affirmative covenants relating to a collateral coverage ratio and collateral valuation. The terms of the loan provide for customary events of default, including, among others, those relating to a failure to make payment, breaches of representations and covenants, and the occurrence of certain events. The loan is secured by a security interest in the assets of Airco 1 and a pledge of Airco’s membership interest in Airco 1.
The foregoing description of the Main Street Loan does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement, the Promissory Note executed in connection with the Loan Agreement, the Security Agreement of Airco 1, and the Pledge Agreement of Airco, copies of which are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure
Potential Aircraft Equity Vehicle and Management Business. The Company announced on December 23, 2020 that it expects in January 2021 to complete the transactions necessary to form a potential approximately $108,000,000 equity vehicle (“CFII”) and management business (“Contrail Asset Management”). The new business and joint venture are being formed to purchase and sell aircraft and engines to be relet or disassembled and sold for parts. The parties anticipate that CFII will be capitalized initially with approximately $108,000,000 in equity capital and that it will establish a portfolio of aircraft assets, focusing on whole aircraft and engine acquisitions, sale-leaseback transactions and end of life part-out solutions. The new business and equity joint venture is expected to be funded principally by three investment partners and the Company. The Company expects that the manager of the venture will be ninety (90%) owned by the Company and that the Company will invest approximately $8,000,000 in the venture. The capital contributed by the investors — presently anticipated to be approximately $100,000,000 — will be contributed into CFII.
The business and joint venture transactions are not yet complete, and the equity capital has not yet been committed. In addition, the contemplated business and joint venture are subject to numerous other conditions and terms customary for transactions of this kind, including further due diligence review. While the parties project a commencement date in January 2021, such commencement may occur after this date and there is no assurance at this time that the formation of the business and joint venture, and commencement of operations, will occur.
A copy of the Press Release announcing the anticipated transactions is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Updated Investor Presentation. The Company updated its investor presentation to potential investor groups. A copy of the PowerPoint Presentation to be used by the Company for such presentations is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. A copy has also been posted on the Company’s website.
Item 9.01 Financial Statements and Exhibits
10.1 Term Loan Agreement for Mail Street Priority Loan Facility by and between Park State Bank and AirCo 1, LLC dated as of December 11, 2020.
10.2 $6,200,000 Main Street Priority Loan Facility Term of AirCo 1, LLC in favor of Park State Bank dated December 11, 2020.
10.3 Security Agreement of AirCo 1, LLC dated as of December 11, 2020.
10.4 Pledge Agreement by and between AirCo, LLC and Park State Bank dated as of December 11, 2020.
99.1 Press Release dated December 23, 2020 announcing proposed Aircraft Equity Vehicle and Management Business
99.2 Investor Presentation dated December 23, 2020.
AIR T INC Exhibit
EX-10.1 2 termloanagreementformain.htm EX-10.1 TERM LOAN AGREEMENT FOR MAIL STREET PRIORITY LOAN FACILITY BY AND BETWEEN PARK STATE BANK AND AIRCO 1,…
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About Air T, Inc. (NASDAQ:AIRT)
Air T, Inc. is a holding company. The Company operates through five segments: overnight air cargo, ground equipment sales, ground support services, printing equipment and maintenance, and leasing. The company’s overnight air cargo segment operates in the air express delivery services industry. The ground equipment sales segment manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the United States military and industrial customers. The ground support services segment provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers. The printing equipment and maintenance segment designs, manufactures and sells advanced digital print production equipment, maintenance contracts, spare parts, supplies and consumable items for these systems. The Company’s leasing segment provides funding for equipment leasing transactions.
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