AeroCentury Corp. Announces Update Regarding Loan Facility
BURLINGAME, Calif., November 12, 2020 (GLOBE NEWSWIRE) – AeroCentury Corp. (NYSE American: ACY) (the “Company”), an independent aircraft leasing company, has released information relating to its indebtedness under its loan facility with MUFG Union Bank, NA, as agent.
On October 30, 2020, Drake Asset Management Jersey Limited (“Drake”), purchased all of the debt of AeroCentury Corp. (the “Company”) owned by the lenders (the “MUFG Lenders”) under the Amended and Restated Fourth Loan and Guarantee Agreement dated May 1, 2020 (the “Loan Agreement”), totaling approximately 87 , $ 9 million, as well as all of the Company’s indebtedness to MUFG Bank, Ltd. (approximately $ 3.1 million) resulting from the termination of the interest rate swaps entered into with respect to this debt incurred under the loan agreement. The purchase and sale were made by the Company pursuant to a Borrowing Party Consent and Release Agreement entered into by the Company and its subsidiaries (the “Consent”). The closing of this debt purchase transaction satisfied the requirement under the loan agreement for the Company to execute a Strategic Alternative (“Strategic Alternative”) with respect to MUFG loan debt satisfactory to the Company. MUFG lenders.
On the same day, the Company entered into Amendment No. 1 to the Loan Agreement (“Amendment No. 1”) with Drake and UMB Bank, NA, the Alternate Administrative Agent under the Loan Agreement, in order to amend the Loan Agreement as follows:
- Deferral of the cash component of interest payments due under the loan agreement, starting with payments due for March 2020, and continuing each consecutive month thereafter, which deferred interest is to be capitalized and added to the principal balance of the debt on each of the respective interest payment due date, until the debt is repaid.
- Removal of the requirement for the Company to execute a Strategic Alternative and the corresponding milestones;
- Removal of the requirement for the Company to maintain a restricted account held with a MUFG lender to hold the proceeds from aircraft sales pending the application of the debt contracted under the loan;
- Changed references to “MUFG Union Bank, NA” to “UMB, Bank, NA”, the new administrative officer under the loan agreement;
- Requirement for approval by Drake for any “material modification” to the leases for the guarantee, defined as any modification or waiver or consent under any lease involving a modification of the lease payments, any reduction, waiver or postponement of the rent, a modification any guarantee of residual value, any modification which adversely affects the guarantee or the rights and interests of the lender and / or the administrative agent in the guarantee, any reduction of any amount payable to any lender or agent in respect of any indemnity, or any change in the State of Registry of aircraft warranties; and
- Elimination of certain financial reporting requirements and changes in the required frequency of certain other existing reporting requirements.
The full text of each of the consents and Amendment # 1 is included as appendices to a current report on Form 8-K regarding these agreements which was filed on November 2, 2020 (November 2, 8-K “) by the Company. from the United States Securities and Exchange Commission (” SEC “), and available on the SEC’s Edgar website as well as on the Company’s website. The foregoing description of the amendment # 1 is meant to be a summary and is qualified in its entirety by the copy of Amendment # 1 filed as Exhibit 10.2 to 8-K on November 2.
The Company and Drake are currently engaged in discussions regarding the settlement and discharge of the indebtedness associated with the loan agreement. There can be no assurance that the Company and Drake will be able to reach a mutual agreement regarding satisfaction and discharge, or that these discussions will lead to any particular result.
About Drake: Drake is an investment company specializing in the regional aviation sector. Drake has invested in a wide variety of regional aircraft types. Falko Regional Aircraft Limited (“Falko”) acts as manager of Drake and Falko is engaged in discussions with the Company on behalf of Drake regarding debt.
About AeroCentury: AeroCentury is an independent global aircraft leasing and financing company specializing in the leasing of regional jet and turboprop aircraft and associated engines. The Company’s aircraft and engines are leased to regional airlines and commercial users around the world.
Harold M. Lyons