Air T Inc. Air T Funding Alpha Income Trust filed SEC Form 8-K: Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
$AIRTP
Air Freight/Delivery Services
Consumer Discretionary
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 29, 2024
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Item 1.01 Entry into a Material Definitive Agreement
On August 29, 2024, Air T, Inc., a Delaware corporation, as Loan Party Agent (the “Company”) and twelve of the Company’s subsidiaries entered into a credit agreement (the “New Credit Agreement”) with Alerus Financial, National Association (the “Lender”). The New Credit Agreement provides for a secured revolving credit facility in an initial maximum principal amount of up to $14 million. Availability under the revolving credit facility is subject to a borrowing base, as further set forth therein. The revolving credit facility provides for a sub-facility for the issuance of letters of credit in an aggregate amount not to exceed $3 million, with the outstanding amount of any such letters of credit reducing availability for borrowings under the revolving credit facility. The revolving credit facility matures on February 28, 2026. Loans outstanding under the revolving credit facility will bear interest at a rate per annum equal to the greater of 5.00% or one-month SOFR plus 2.00%.
In addition to the revolving credit facility, the New Credit Agreement provides for two secured term loans – Term Note A and Term Note B. Term Note A is a loan in the principal amount of $10,720,000 that matures on August 15, 2029. Term Note A bears interest at a rate per annum equal to the greater of 5.00% or one-month SOFR plus 2.00%. Term Note A requires monthly payments of principal commencing September 15, 2024 with such payments set at a 7 year level principal amortization and a payment of $3,190,476.05 due at maturity. A prepayment premium based on the amount prepaid is due in certain circumstances.
Term Note B is a loan in the principal amount of $2,280,000 that matures on August 15, 2029. Term Note B bears interest at a rate per annum equal to the greater of 5.00% or one-month SOFR plus 2.00%. Term Note B requires monthly payments of principal commencing September 15, 2024 with such payments set at a 25 year level principal amortization and a payment of $1,831,600.00 due at maturity. A prepayment premium based on the amount prepaid is due in certain circumstances.
The following Company subsidiaries (collectively the “Borrowers”) are co-borrowers under the New Credit Agreement and each of the notes: AirCo, LLC, Airco 2, LLC, Air’Zona Aircraft Services, Inc., AirCo Services, LLC, CSA Air, Inc., Global Ground Support, LLC, Jet Yard, LLC, Jet Yard Solutions, LLC, Mountain Air Cargo, Inc., Stratus Aero Partners, LLC, Worldwide Aircraft Services, Inc., and Worthington Aviation, LLC. The obligations of the Borrowers under the New Credit Agreement and the notes are secured by a first priority security interest in substantially all of the Borrowers’ current assets, including accounts receivable and inventory. The Company is not a borrower under the New Credit Agreement but has guaranteed the obligations of the Borrowers owed to the Lender. In addition, Air T, Inc. has pledged a brokerage account of marketable securities held at a securities intermediary to secure the obligations. Furthermore, the obligations are further secured by a deed of trust on approximately 4.626 acres of real estate that includes a 13,000 square foot office building in Denver, North Carolina.
The New Credit Agreement contains a financial covenant that the Borrowers will not permit the debt service coverage ratio to be less than 1.25 to 1.00 at any quarterly measurement date or permit the leverage ratio to be greater than 3.00 to 1.00 at any semi-annual measurement date. The New Credit Agreement also includes other customary representations and warranties, affirmative covenants, negative covenants and events of default. Upon the occurrence of events of default, the obligations to the Lender may be accelerated and the commitments may be terminated.
In connection with the closing of the New Credit Agreement, the Company and its subsidiaries used proceeds from the new financing to satisfy and discharge all obligations, and terminated all commitments, under the Company’s existing secured credit facility with Minnesota Bank & Trust. The Company incurred no termination penalties in connection with such termination.
The descriptions above are only a summary of the material provisions of the New Credit Agreement, the Revolving Credit Note, Term Note A, Term Note B, the Security Agreement, the Pledge Agreement and the Guaranty and is qualified in its entirety by reference to the complete text of such documents a copy of which are attached hereto as Exhibit 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 to this current report on Form 8-K and incorporated by reference herein.
Item 1.02 Termination of Material Definitive Agreements
The information set forth in Item 1.01 of this Current Report on Form 8-K with respect to the termination of the terminated revolving credit facility and related loan agreements with Minnesota Bank & Trust is hereby incorporated by reference in this Item 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference to this Item 2.03.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 10.4 | |||||
| 10.5 | |||||
| 10.6 | |||||
| 10.7 | |||||
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K. | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 30, 2024
AIR T, INC.
By: /s/ Brian Ochocki
Brian Ochocki, Chief Financial Officer