Air T Inc, a North Carolina-based air courier services provider, has entered into a significant financial agreement, expanding its debt capacity with investors. On Monday, the company, along with its subsidiary AAM 24-1, LLC, amended and restated its original financing terms through a Second Note Purchase Agreement.
The updated agreement with Honeywell Common Investment Fund and Honeywell International Inc (NASDAQ:HON). Master Retirement Trust increases the senior secured notes issued to a total of $30 million, incorporating the original $15 million from the previous agreement. The notes carry an 8.5% annual interest rate, payable semi-annually, and are set to mature on March 1, 2031.
Air T Inc has the flexibility to prepay the notes, subject to certain conditions. If the company chooses to prepay within one year from the issue date, it must pay a 2% prepayment premium. After the first year and up to the second anniversary of the issue date, the prepayment premium drops to 1%. Any partial prepayments must be at least $1 million.
The collateral includes various equity interests assigned by Air T Inc to its subsidiary at the closing of the original financing, as well as the issued and outstanding capital stock of the subsidiary owned by Air T Inc. Additionally, 160,000 shares of Alpha Income Trust Preferred Securities of Air T Funding are pledged to the investors.
In other recent news, Air T, Inc. has reported significant developments. The company has appointed Tracy Kennedy as the new Chief Financial Officer, succeeding Brian Ochocki, who is stepping down. Kennedy, previously the Chief Accounting Officer, will now oversee the company's financial operations, leveraging her six years of experience with Air T.
The company has also secured a $10 million loan from Old National Bank to facilitate the acquisition of two Airbus planes through its subsidiary, CASP Leasing I, LLC. The purchase of the A320 and A321 aircraft, valued at over $18 million, aligns with the company's strategy to expand its aircraft leasing and parts sales business.
In addition, Air T's 2024 Annual Meeting of Stockholders saw the successful election of all director nominees and the approval of executive officers' compensation. Deloitte & Touche LLP was ratified as the company's independent registered public accounting firm for the fiscal year 2025. These are the latest developments in the company's ongoing efforts to strengthen its position in the aviation services industry.
InvestingPro Insights
Air T Inc's recent financial agreement to increase its debt capacity comes at a time when the company faces some financial challenges. According to InvestingPro data, Air T Inc has a market capitalization of $46.37 million USD and is currently not profitable over the last twelve months. This context makes the new $30 million debt agreement particularly significant for the company's financial strategy.
InvestingPro Tips highlight that Air T Inc's liquid assets exceed short-term obligations, which could provide some financial flexibility as it takes on this additional debt. However, the company is trading at high EBIT and EBITDA valuation multiples, suggesting that investors may be pricing in expectations for future growth or improvements.
It's worth noting that Air T Inc's stock price has fallen significantly over the last three months, with a -33.19% price total return. This decline might reflect market concerns about the company's financial performance or broader industry challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Air T Inc, providing deeper insights into the company's financial situation and market position.
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