ERICKSON INCORPORATED (OTCMKTS:EACIQ) Files An 8-K Entry into a Material Definitive Agreement


ERICKSON INCORPORATED (OTCMKTS:EACIQ) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement.

The information set forth below in Item 7.01 of this Current
Report on Form 8-K (this Form 8-K), exclusively regarding the
Backstop Agreement (as defined below) is incorporated herein by
Item 7.01. Regulation FD Disclosure.
As previously disclosed, on November 8, 2016, Erickson
Incorporated (the Company) and its subsidiaries (collectively
with the Company, the Debtors) filed voluntary petitions in the
United States Bankruptcy Court for the Northern District of
Texas, Dallas Division (the Bankruptcy Court) seeking relief
under Chapter 11 of Title 11 of the United States Code (the
Bankruptcy Code). The Chapter 11 cases are being jointly
administered under the caption In re Erickson Incorporated, et
al., Case No. 16-34393 in the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division (the Chapter 11
Cases). The Debtors continue to operate their business and manage
their properties as debtors-in-possession under the jurisdiction
of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy
On February 3, 2017, the Debtors filed the Second Amended Joint
Plan of Reorganization of Erickson Incorporated, et al., to
Chapter 11 of the Bankruptcy Code (as may be amended from time to
time, the Plan) in their Chapter 11 Cases. The Debtors also filed
the Second Amended Disclosure Statement in Support of the Second
Amended Joint Plan of Reorganization of Erickson Incorporated, et
al., to Chapter 11 of the Bankruptcy Code (the Disclosure
Statement). The Bankruptcy Court entered an order approving the
Disclosure Statement on February 6, 2017.
Rights Offering
In connection with the Debtors Plan, the Company has agreed to
solicit participation in a rights offering (the Rights Offering)
which contemplates a new money investment of up to $30.0 million
(the Rights Offering Amount), by certain eligible holders of the
Companys 8.25% Second Priority Senior Secured Notes due 2020
(Eligible Offerees). Eligible Offerees shall be offered rights in
an amount not to exceed such offerees pro rata share of the
Rights Offering Amount based upon a fraction (expressed as a
percentage) the numerator of which is the principal amount of its
Allowed Existing Second Lien Claims (as defined in the Plan) and
the denominator of which is the principal amount of all Allowed
Existing Second Lien Claims, to purchase (i) in respect of the
first $20.0 million of the Rights Offering, shares of reorganized
common stock of the Company (the New Common Stock), at a per
share purchase price (the Purchase Price) at an implied 10%
discount to the Plan Equity Value (as defined in the Plan) and
(ii) in respect of any amount in excess of $20.0 million, up to
$30.0 million, a combination of New Common Stock, at the same
discount to the Plan Equity Value, and term loans (the New Second
Lien Loans) issued under a New Second Lien Credit Facility (the
Rights Offering New Second Lien Loans), at par, on the terms and
conditions set forth in the Companys proposed Plan and the
Backstop Agreement (described below).
Prior to the effective date of the Plan (the Effective Date), the
holders of at least 66-2/3% of the backstop commitments under the
Backstop Agreement (the Requisite Investors) and the Debtors will
determine the Rights Offering Amount, the extent to which
Eligible Offerees receive New Common Stock and/or New Second Lien
Loans for any amounts in excess of $20.0 million, the Purchase
Price and the number of shares of New Common Stock to be received
therefor in the Rights Offering. The Debtors will publicly
announce by press release and filing with the Bankruptcy Court
such terms. The Requisite Investors and the Debtors may modify
these terms before the Effective Date to the extent necessary in
connection with the anticipated financing needs of the Debtors at
the Effective Date, in which case, the Debtors will publicly
announce by press release and filing with the Bankruptcy Court
such modified terms.
On February 15, 2017, the Company commenced the Rights Offering.
Backstop Agreement
On February 9, 2017 and prior to the commencement of the Rights
Offering, the Company entered into a backstop agreement (the
Backstop Agreement) with certain parties named therein (the
Investors), to which such parties agreed, subject to the terms
and conditions in the Backstop Agreement, to participate in the
Rights Offering and backstop the full amount of the Rights
Offering. In exchange for the commitments under the Backstop
Agreement, the Company will pay to the Investors, in the
aggregate, a nonrefundable aggregate premium on the Effective
Date in additional shares of New Common Stock in an amount equal
to 6.0% of the Rights Offering Amount. Consummation of the
Backstop Agreement is subject to several conditions, including
(i) approval of the Plan by the creditors and the Bankruptcy
Court, (ii) the receipt of all required governmental and material
third-party approvals, and (iii) the absence of a material
adverse effect with respect to the Company.
The foregoing summary of the Backstop Agreement does not purport
to be complete and is qualified in its entirety by reference to
the Backstop Agreement filed as Exhibit 10.1, respectively,
hereto and incorporated herein by reference.
Disclosure Statement
A copy of the Disclosure Statement, which describes the Rights
Offering and the proposed Plan (which is attached as an exhibit
thereto), is attached as Exhibit 99.1 to this Current Report on
Form 8-K.
The Disclosure Statement contains certain projections and
valuation analyses of future financial performance (collectively,
the Financial Projections). Certain of the Companys management
team (Management) prepared the Financial Projections based on
expectations, beliefs, opinions, and assumptions of Management
that Management believed were reasonable at the time they were
made. The Financial Projections contained within the Disclosure
Statement were prepared in December 2016 and January 2017. Such
expectations, beliefs, opinions, and assumptions may not be
appropriate as of the date hereof and there can be no assurance
they will be realized; rather, actual future financial results
are likely to vary materially from the forward-looking
information presented therein. The Financial Projections were not
prepared in accordance with generally accepted accounting
principles or published guidelines established by the American
Institute of Certified Public Accountants for preparation and
presentation of prospective financial information.
The furnishing of the Financial Projections should not be
regarded as an indication that the Company or any other person
considered, or now considers, this information to be predictive
of actual future results, and does not constitute an admission or
representation by any person that such information is material,
or that the expectations, beliefs, opinions, and assumptions that
underlie such Financial Projections remain the same as of the
date of this Current Report on Form 8-K, and readers are
cautioned not to place undue reliance on the prospective
financial information.
Neither the independent auditor of the Company nor any other
independent accountant has examined, compiled, or performed any
procedures with respect to the Financial Projections.
Accordingly, none has expressed any opinion or any other form of
assurance on such information or its achievability and none
assumes any responsibility for the Financial Projections.
The Company does not, as a matter of course, publish its business
plans or strategies, projections or anticipated financial
position. Accordingly, the Company does not anticipate that it
will, and disclaims any obligation to, furnish updated business
plans or projections. For additional information on factors that
may cause actual future financial results to vary materially from
the information presented herein, see the section entitled
Cautionary Note Regarding Forward-Looking Statements below and
the risk factors set forth in Article XIV of the Disclosure
Additional Information about the Chapter 11 Cases
Additional information on the Chapter 11 Cases, including access
to documents filed with the Bankruptcy Court and other general
information about the Chapter 11 Cases, is available at Information contained on, or that can be
accessed through, such website is not part of this Current
The information included in this Form 8-K under Item 7.01 is
being furnished and shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or otherwise subject to liabilities of that
Section, unless the registrant specifically states that the
information is to be considered filed under the Exchange Act or
incorporates it by reference into a filing under the Exchange Act
or the Securities Act of 1933, as amended.
Cautionary Note Regarding Forward-Looking Statements
This Form 8-K and the related exhibits contain forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements, including those
relating to the intent, beliefs, plans, projections or
expectations of the Company are based upon current expectations
and are subject to a number of risks, uncertainties and
assumptions. It is not possible to predict or identify all such
factors and the following list should not be considered a
complete statement of all potential risks and uncertainties
relating to the Debtors, including, but not limited to: (i) the
Companys ability to obtain sufficient acceptances in connection
with the Rights Offering, (ii) the Debtors ability to obtain
confirmation of the Plan from the Bankruptcy Court and creditors
and/or meet all of the conditions precedent therein necessary to
effectuate the Plan, (iii) the Companys ability to obtain the
Bankruptcy Courts approval with respect to motions or other
requests made to the Bankruptcy Court in the Chapter 11 Cases,
including maintaining strategic control as debtor-in-possession,
(iv) the effects of the filing of the bankruptcy petitions on the
Companys business and the interests of various constituents, (v)
the Bankruptcy Court rulings in the Chapter 11 Cases, as well the
outcome of all other pending litigation and the outcome of the
Chapter 11 Cases in general, (vi) the length of time that the
Company will operate under Chapter 11 protection and the
continued availability of operating capital during the pendency
of the Chapter 11 proceedings, (vii) risks associated with third
party motions in the Chapter 11 Cases, which may interfere with
the Companys ability to confirm and consummate a plan of
reorganization, (viii) the potential adverse effects of the
Chapter 11 proceedings on the Companys liquidity or results of
operations, (ix) increased advisory costs to execute the Companys
reorganization, (x) the impact of the NASDAQ suspension of
trading and commencement of delisting proceedings on the
liquidity and market price of the Companys common stock and on
the Companys ability to access the public capital markets, (xi)
the uncertainty that any trading market for the Companys common
stock will exist or develop in the over-the-counter markets,
(xii) the Companys ability to continue as a going concern and
(xiii) other risks and uncertainties. These risks and
uncertainties could cause actual results to differ materially
from those described in the forward-looking statements. For a
more detailed discussion of risk factors, please see Part I, Item
1A, Risk Factors of the Companys most recent Annual Report on
Form 10-K for more information. The Company assumes no obligation
and expressly disclaims any duty to update the information
contained herein except as required by law.
Item 9.01
Financial Statements and Exhibits.
Backstop Agreement between Erickson Incorporated and
the Investors Identified therein dated as of February
9, 2017.
Second Amended Disclosure Statement.


Erickson Incorporated is a provider of aviation services to both commercial and governmental entities in approximately 20 countries. The Company’s operating segments include Commercial Aviation Services, Global Defense and Security, and Manufacturing and Maintenance, Repair and Overhaul (MRO). The Company owns and operates a fleet of aircraft and provides a range of aerial services, including critical supply and logistics for deployed military forces, humanitarian relief, firefighting, timber harvesting, infrastructure construction and crewing. It also maintains a vertically integrated manufacturing capability for the Aircrane and related components, and MRO services for the Aircrane and other aircraft. The Company operates a fleet of light, medium and heavy rotor-wing and fixed-wing aircraft. The Company also leases its aviation services for missions, with customers paying for the aircraft, maintenance, crewing services and fuel to operate the aircraft.


ERICKSON INCORPORATED> (OTCMKTS:EACIQ) closed its last trading session down -0.002 at 0.155 with 658,213 shares trading hands.