Notes Payable and Accrued Interest

9 Months Ended

Sep. 30, 2014

Notes Payable and Accrued Interest [Abstract]

5.Notes Payable and Accrued Interest

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

	September 30, 2014		December 31, 2013
Credit Facility principal	$	108,200,000	$	77,500,000
Credit Facility accrued interest		152,400		27,300
	$	108,352,400	$	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 recording aircraft impairment charges on aircraft totaling $6,800,000 during the second quarter ended June 30, 2014. In August 2014, the Company and the Credit Facility banks agreed to an amendment to the profitability covenant, which cured the June 30, 2014 non-compliance.

As of September 30, 2014, the Company was out of compliance with several covenants. The non-compliance resulted primarily from the Company recording additional aircraft impairment charges on aircraft totaling $11,718,700 during the third quarter of 2014. In November 2014, the Company and the Credit Facility banks agreed to an amendment to the Credit Facility, which cured the September 30, 2014 non-compliance, revised the compliance requirements through September 30, 2015, decreased the amount of the Credit Facility to $150 million due to the departure of two participant lenders, and decreased the maximum amount to which the Credit Facility can be expanded from $200 million to $180 million.

Based on its current projections, the Company believes that it will be in compliance with all of its Credit Facility covenants at future calculation dates. However, there can be no assurance the Company's beliefs will prove to be correct.

The unused amount of the Credit Facility was $71,800,000 and $52,500,000 as of September 30, 2014 and December 31, 2013, respectively.

The weighted average interest rate on the Credit Facility was 3.59% and 3.94% at September 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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