Attached files
| file | filename |
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| EX-10.2 - MATERIAL CONTRACTS - AEROCENTURY CORP | mortgagerevised.htm |
| EX-10.1 - MATERIAL CONTRACTS - AEROCENTURY CORP | fourthamendedandrestatedl.htm |
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): May 1, 2020
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
theExchange Act (17 CFR 240.13e-4(c)
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
On
May 1, 2020, AeroCentury Corp. (the "Company"), MUFG Union Bank,
N.A. ("MUFG"), U.S. Bank National Association ("US Bank"), Umpqua
Bank, Columbia State Bank, and Zions Bancorporation,
N.A.(fka ZB, N.A.) dba California Bank & Trust
(“CB&T”) (collectively the "Lenders") entered into
a Fourth Amended and Restated Loan and Security Agreement (the
"Loan Agreement"), which, amended and restated the existing
agreement regarding the Company's indebtedness to the Lenders (the
"Loan Agreement") and effected the following changes to the terms
and provisions of such indebtedness:
●
A forbearance of
the existing defaults and events of default under the Loan
Agreement until May 10, 2020, with a provision to extend such
forbearance to July 1, 2020, and August 15, 2020, if the Company is
still in compliance with the agreement at May 10, 2020, and July 1,
2020, respectively;
●
Elimination of the
borrowing base collateral value covenant under the Loan Agreement,
and of the existing event of default under the Loan Agreement for a
borrowing base deficiency, along with cessation of the default
interest accrual on the outstanding loan amount;
●
Conversion of the
revolving credit facility struture to a term loan structure with an
initial principal balance of $83,689,900.86
and a final maturity date of March 31,
2021;
●
Interest accrual on
the indebtedness based on the Base Rate (defined as the greater of
(i) the rate of interest most recently announced by MUFG as to its
U.S. dollar “Reference Rate”, or (ii) the Federal Funds
Rate plus one-half of one percent (0.50%)), according to the
following schedule: (a) Base Rate + 525 bps
(0 bps as cash interest and 525 bps as payment in kind ("PIK"))
until June 30, 2020, and (b) Base Rate + 525 bps
(100 bps as cash interest and 425 bps as PIK) from and after
July 1, 2020, subject to a Base Rate floor at
325 bps for both time periods;
●
Deferral of the
cash component of the interest payments (on the loan indebtedness
and swap termination payment obligation) that was due on April 1,
2020 and May 1, 2020, until the earlier of (i) the date of receipt
of net proceeds into the Company's restricted account
held at MUFG to hold sales proceeds (the "Restricted
Account") from the sale of certain enumerated aircraft
assets and (ii) July 1, 2020;
●
Required sweep of
any unrestricted cash in the Company’s bank accounts in
excess of $1,000,000 at the end of each fiscal
quarter;
●
Addition of certain
default provisions triggered by certain defaults or other events
with respect to the Company’s aircraft leases for the
Company's aircraft that are collateral for the Loan Agreement
("Aircraft Collateral");
●
Provision for
certain payments from the Restricted Account
to (i) the Company’s investment banking advisor; (ii)
payments due under the agreement and for interest on the swap
termination indebtedness owed by the Company; and (iii)
Lenders’ outside counsel and consultants;
●
Addition of a
requirement for the Company's engagement of a Financial
Advisor/Consultant, at the Company’s expense, with a specific
scope of work as prescribed by the Loan Agreement;
●
Revisions to the
Company’s required appraisal process for the Aircraft
Collateral;
and
●
Establishment of
deadlines for achievement of milestones toward execution of
Company
strategic alternatives for the Company and/or its assets that would
enable repayment of the Loan Agreement indebtedness
("Strategic Alternatives") as follows: (a) obtaining
indications of interest for Strategic Alternatives by May 6, 2020;
(b) obtaining a fully-executed
(tentative or generally non-binding) agreement on the terms and
conditions for a Strategic Alternative by June 29, 2020, and
(c) consummation of the selected strategic Alternative by August
15, 2020.
The
borrowings under the Loan Agreement continue to be secured by a
first priority lien, which
lien is documented in an amended and restated mortgage and security
agreement (the "Mortgage"), in all of the
Company's assets, including the Company’s aircraft
portfolio, except those aircraft that are subject to special
purpose financing held by subsidiaries of the Company.
The Loan Agreement and the Mortgage (collectively the "Loan
Documents") require the Company to comply with certain covenants
relating to payment of taxes, preservation of existence,
maintenance of property and insurance, and periodic financial
reporting. The Loan Documents restrict the Company with
respect to certain corporate level transactions and transactions
with affiliates or subsidiaries without consent of the Lenders.
Events of default under the Loan Agreement include failure to make
a required payment within three business days of a due date or to
comply with other obligations under the Loan Documents (subject to
specified cure periods for certain events of default), a default
under other indebtedness of the Company, and a change in control of
the Company. Remedies for default under the Loan Agreement
include acceleration of the outstanding debt and exercise of any
remedies available under applicable law, including foreclosure on
the collateral securing the Loan Agreement debt.
The foregoing description of the Loan Agreement
and the Mortgage is intended to be a summary and is qualified in
its entirety by the copies of the Credit Agreement and the Security
Agreement filed as Exhibits 10.1 and 10.2
hereto.
The
information set forth under Item 1.01 of this Current Report
on Form 8-K is incorporated in this Item 2.03 by
reference.
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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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10.1
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Fourth Amended and
Restated Loan and Security Agreement, dated May 1, 2020,
between the Company and MUFG Union Bank, N.A., as administrative
agent, and MUFG
Union Bank, N.A. ("MUFG"), U.S. Bank National Association ("US
Bank"), Umpqua Bank, Columbia State Bank, and Zions
Bancorporation, N.A.(fka ZB, N.A.) dba California Bank & Trust
(“CB&T”)
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10.2
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Fourth Amended and Restated Mortgage
and Security Agreement, dated as of May 1, 2020 (this "Mortgage"), between the
Company, MUFG as adminstrative agent, and MUFG
Union Bank, N.A. ("MUFG"), U.S. Bank National Association ("US
Bank"), Umpqua Bank, Columbia State Bank, and Zions
Bancorporation, N.A.(fka ZB, N.A.) dba California Bank & Trust
(“CB&T”)
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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:
May 6, 2020
AEROCENTURY
CORP
By: /s/
Harold M. Lyons
Harold
M. Lyons
Sr.
Vice President & Chief Financial Officer