Chief Financial Officer
BURLINGAME, California, June 2, 2020 -- AeroCentury Corp. ("AeroCentury" or the "Company") (NYSE American: ACY), an independent aircraft leasing company, today reported a first quarter 2020 net loss of $10.2 million, or ($6.58) per share, compared to a net loss of $1.3 million, or ($0.85) per share, for the first quarter of 2019.
Results for the quarter ended March 31, 2020 included impairment losses totaling $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 million 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.
During the first quarter ended March 31, 2020, the COVID-19 pandemic had a significant impact on the Company’s financial circumstances, mainly due to the impact on the Company’s primary customers, regional airlines. The Company’s customers have experienced a steep decline in revenue, and some requested lease payment concessions and/or deferrals from the Company
On May 1, 2020, the Company 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 that the Company close on such strategic transaction by August 15, 2020. A more detailed description of the agreement, as well as the full text of the agreement, is available in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 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 Corp. "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 Company in a better position to weather the COVID impact as it plays out in the coming quarters. The Company faces many challenges outside of its control, but we remain steadfast in our aim to preserve shareholder value as much as possible as we work through these unprecedented times for the aircraft leasing industry."First Quarter 2020 Highlights and Comparative Data
Aircraft and Engine Portfolio
AeroCentury’s portfolio currently consists of thirteen aircraft, spread over six different aircraft types. Eleven of the aircraft, comprised of nine regional jets and two turboprops, are held for lease. Two additional turboprops are held under sales-type leases. The Company also has three turboprop aircraft, two of which are being sold in parts, and three regional jet aircraft that are held for sale. The current customer base comprises eight customers operating in six countries.
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About AeroCentury: AeroCentury is an independent global aircraft operating lessor and finance company specializing in leasing regional jet and turboprop aircraft and related engines. The Company's aircraft and engines are leased to regional airlines and commercial users worldwide.
This press release contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements in this press release other than statements that are purely historical are forward-looking statements. Forward-looking statements in this press release include statements that the terms of the amendment make it possible for the Company to negotiate and execute a strategic transaction aimed at resolving its MUFG loan default, and puts the Company in a better position to weather the COVID impact as it plays out in the coming quarters; and that the Company aims to preserve shareholder value as much as possible while working through unprecedented times for the aircraft leasing industry. The Company’s beliefs, expectations, forecasts, objectives and strategies for the future are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including but not limited to unanticipated further defaults under the Company’s debt agreements, failure to obtain favorable offers for strategic transactions or to come to agreement with potential offerors, and further disruptions to the airline industry due to the COVID pandemic, other unforeseen events or general economic conditions. The forward-looking statements in this press release and the Company’s future results of operations are subject to additional risks and uncertainties set forth under the heading “Factors that May Affect Future Results and Liquidity” in documents filed by the Company with the Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q and the Company’s latest annual report on Form 10-K, and are based on information available to the Company on the date hereof. The Company does not intend, and assumes no obligation, to update any forward-looking statements made in this press release. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.