AeroCentury today reported a first quarter 2020 net loss of $10.2 million, compared to a net loss of $1.3 million, for the same period 2019.
Results for the quarter ended March 31, 2020 included impairment losses totalling $6.7 million, arising from revised estimated sales proceeds for three regional jet aircraft and an older turboprop aircraft that is being sold in parts. Results also included a $1.2 million bad debt allowance related to two of the Company’s aircraft that are subject to finance leases and a $1.9 million non-cash charge related to the Company’s interest rate swaps, which is included in interest expense.
The results for the first quarter ended March 31, 2019 included $1.4 millions of impairment provisions related to the write-down of two older off-lease turboprop aircraft and a spare engine to their estimated sales values, and a non-cash charge of $0.4 million related to the Company’s interest rate swaps, which was included in interest expense.
On May 1 AeroCentury and its credit facility lenders entered into a Fourth Amended and Restated Loan and Security Agreement, which converted the Company’s revolving credit facility with MUFG Union Bank as Agent, into a term loan with an initial principal balance of $83,689,900.
The amendment provides for a forbearance of the existing defaults and events of default under the Company’s indebtedness to at least June 29, 2020, which is the milestone for the Company entry into a written agreement for a strategic transaction that would enable repayment of the MUFG indebtedness.
The loan has a stated final maturity date of March 31, 2021, but also requires AeroCentury close on such strategic transaction by August 15, 2020.
“The COVID pandemic has had a severe negative impact on the airline industry and our lessees and their compliance with lease obligations,” explained Michael Magnusson, president of AeroCentury. “We were, however, with the cooperation of our lenders, able to consummate in early May an amendment to our MUFG loan agreement,” Magnusson continued.
“We believe the terms of the amendment make it possible for the Company to negotiate and execute a strategic transaction aimed at resolving our MUFG loan default and puts the use in a better position to weather the COVID impact as it plays out in the coming quarters.”