Notes Payable and Accrued Interest

6 Months Ended

Jun. 30, 2014

Notes Payable and Accrued Interest [Abstract]

5.Notes Payable and Accrued Interest

At June 30, 2014 and December 31, 2013, the Company’s notes payable and accrued interest consisted of the following:

	June 30, 2014		December 31, 2013
Credit Facility principal	$	101,400,000	$	77,500,000
Credit Facility accrued interest		57,500		27,300
	$	101,457,500	$	77,527,300

During May 2014, the Company’s $130 million Credit Facility (the “Credit Facility”), which is provided by a syndicate of banks, was increased to $180 million and extended through May 31, 2019. The Credit Facility is secured by all of the assets of the Company, including its aircraft and engine portfolio.

In November 2013, the Company obtained a waiver of compliance with a customer concentration covenant at the September 30, 2013 and December 31, 2013 calculation dates. The Company was in compliance with all covenants other than the waived covenant under the Credit Facility agreement at December 31, 2013.

As of June 30, 2014, the Company was out of compliance with a profitability covenant. The non-compliance resulted primarily from the Company recognizing aircraft impairment charges totaling $6,800,000 at June 30, 2014. Based on its current projections, the Company believes that it may be out of compliance with this covenant, which is calculated on a trailing 12 months basis, at subsequent calculation dates. The Company is in discussions with the agent bank to amend the credit facility agreement to exclude impairment charges from the profitability covenant calculation, and retroactively cure the covenant default on June 30, 2014 and subsequent calculation dates. There is, however, no assurance that such an amendment agreement will eventually be entered into between the Company and the Credit Facility banks.

The Company was in compliance with all other covenants at June 30, 2014.

The unused amount of the Credit Facility was $78,600,000 and $52,500,000 as of June 30, 2014 and December 31, 2013, respectively.

The weighted average interest rate on the Credit Facility was 3.69% and 3.94% at June 30, 2014 and December 31, 2013, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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