AEROCENTURY REPORT ON FORM 8-K DATED
MARCH 29, 2021
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
__________________________
FORM 8-K
__________________________
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 29, 2021
AEROCENTURY CORP.
(Exact name of Registrant as
specified in its charter)
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Delaware
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94-3263974
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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1440
Chapin Avenue, Suite 310
Burlingame, CA
94010
(Address
of principal executive offices including Zip
Code)
650-340-1888
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name and former address, if changed since last
report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)
Securities registered
pursuant to Section 12(b) of the Act:
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|
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Title of each
class
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Name of each exchange on which
registered
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Common Stock, par value $0.001 per
share
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NYSE
American Exchange
|
Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth
company ☐
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item 1.03
Bankruptcy or Receivership
Item
2.04. Triggering Events That Accelerate or Increase a
Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement.
Chapter 11 Filing
On March 29, 2021 (the
“Petition
Date”), AeroCentury Corp. along with its United States
(“U.S.”) subsidiaries
(collectively referred to as the “Company,” or the
“Debtor”) filed a
voluntary petition for relief under chapter 11 of title 11
(“Chapter
11”) of the United States Code (the
“Bankruptcy
Code”) in the United States Bankruptcy Court for the
District of Delaware (the “Court”), commencing the
Chapter 11 case seeking administration under In re AeroCentury
Corp.
et al. (Case No. 21-10636) (the “Chapter 11
Case”). The Debtor will continue to operate
its business and manage its property as a debtor-in-possession
pursuant to Sections 1107 and 1108 of the Bankruptcy Code. To
ensure its ability to continue operating in the ordinary course of
business, the Debtor has filed with the Court motions seeking a
variety of “first-day” relief (collectively, the
“First Day
Motions”), including the authority to continue utilizing and maintaining
its existing cash management system and the authority to pay its
employees in the ordinary course of
business.
The Company has requested the Court approve a Chapter 11
motion to hold an auction sale (“Auction
Sale”) for its assets in
order to fund repayment of its indebtedness to its sole secured
lender, Drake Asset Management Jersey Limited
(“Drake”).
Debtor has entered into a stalking horse agreement with Drake (the
“Drake
Agreement”) to acquire
the aircraft collateral securing the Drake indebtedness, subject to
higher and better bids. If completed, the Auction Sale of the
aircraft collateral is expected to resolve in full the
Company’s outstanding indebtedness to
Drake.
The Company’s management of
its portfolio assets and operations with respect to its aircraft
and communications and interaction with lessees will remain
unchanged by the Chapter 11 Case commencement, and the Company
intends to pay vendors and suppliers under customary terms for
goods and services received on or after the filing date and pay its
employees in the usual manner. Business operations across the AeroCentury
platform are continuing without
interruption.
The Company is currently in the
process of finalizing a proposed Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code (“Plan”) intended to
address resolution of the Company’s outstanding liabilities
and position the Company for stability and long-term growth.
There
can be no assurances that the Company will obtain the Court’s
approval of a Plan, or that if the Plan is approved, that the
reorganization of the Company can or will be successfully
implemented as contemplated by the
Plan.
Bankruptcy Court filings are
available at
http://www.kccllc.net/aerocentury, or by calling the
Company's claims agent at (866) 967-1783
(U.S./Canada) or (310) 751-2683 (International) or emailing
AeroInfo@kccllc.com.
Effect of Chapter 11 Case on Debt Instruments.
The
commencement of the Chapter 11 Case constitutes an event of default
under following debt obligations of the Company and its
subsidiaries (“Debt Instruments”)
Pay{{OPPORTUNITY_CONFIRMED_DBE
●
Fourth
Amended and Restated Loan and Security Agreement, dated May 1,
2020, between the Company and Drake Asset Management Jersey Limited
(the “Drake Loan Agreement”), which has an outstanding
principal indebtedness of approximately $83.2 million as of the
date of the Petition Date.
●
Paycheck
Protection Program Loan between American Express National Bank and
JetFleet Management Corp. (“JMC”), dated May 18, 2020,
with a principal amount of $276,352.50
●
Paycheck
Protection Program Loan between Customers Bank and JMC, dated
February 11, 2021, with a principal amount of
$170,002
Under the
Drake Loan Agreement, the Chapter 11 commencement caused an
immediate acceleration of the debt obligations thereunder. Any
efforts to enforce payment obligations under the Debt Instruments
are automatically stayed as a result of the filing of the Chapter
11 Case and the holders’ rights of enforcement with respect
to the Debt Instruments are subject to the applicable provisions of
the Bankruptcy Code.
Item 7.01
Regulation FD Disclosures
On March
29, 2021, the Company issued a press release announcing that the
Debtor had filed a petition to initiate the Chapter 11 case. A copy
of the press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
The
information being furnished in this Item 7.01 and in Exhibit 99.1
shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section.
* * * * *
Cautionary
Information Regarding Trading in the Company’s
Securities.
The
Company’s securityholders are cautioned that trading in the
Company’s securities during the pendency of the Chapter 11
Case is highly speculative and poses substantial risks, including
the risk that the Company's common stock may be suspended or
delisted from trading on the NYSE American Exchange. Trading
prices for the Company’s securities may bear little or no
relationship to the actual recovery, if any, by holders thereof in
the Company’s Chapter 11 Case, and the effectiveness of a
Plan is subject to numerous conditions, including approval by the
Bankruptcy Court. When and if a Plan is proposed and confirmed by
the Court, the Plan may call for reinstatement of the existing
equity, or could cause the existing equity interests in the Company
to be modified or cancelled. There is no assurance that the holders
of the Company’s existing equity will receive or retain any
property on account thereof upon execution of the Plan or
otherwise. Accordingly, the Company urges extreme caution with
respect to existing and future investments in its
securities.
* * * * *
Cautionary Note
Regarding Forward-Looking Statements
This Current Report on Form 8-K
contains forward-looking statements, which are based on the
Company’s current expectations, estimates, and projections
about the businesses and prospects of the Company and its
subsidiaries, as well as management’s beliefs, and certain
assumptions made by management. Words such as
“anticipates,” “expects,”
“intends,” “plans,” “believes,”
“seeks,” “estimates,” “may,”
“should,” “will” and variations of these
words are intended to identify forward-looking statements. Such
statements speak only as of the date hereof and are subject to
change. The Company undertakes no obligation to revise or update
publicly any forward-looking statements for any reason. These
statements are not guarantees of future performance and are subject
to certain risks, uncertainties, and assumptions that are difficult
to predict.
Forward-looking statements discuss,
among other matters: the Company’s intentions with respect to
operation of its business going forward, including with respect to
its cash management system and employee compensation; management of
its aircraft portfolio; its plan for an auction sale of assets in
order to resolve its indebtedness; the anticipated formulation,
approval and execution of a Chapter 11 plan of reorganization for
the Company’s businesses in order to resolve liabilities and
position the Company for stability and long term growth; and any
statements or assumptions underlying any of the foregoing. Such
statements are not guarantees of future performance and are subject
to certain risks, uncertainties, and assumptions that are difficult
to predict. Accordingly, actual results could differ materially and
adversely from those expressed in any forward-looking statements as
a result of various factors.
Important factors that may cause
such differences include, but are not limited to, the decisions of
the Court; negotiations with the Company’s creditors and any
committee approved by the Court; the Company’s ability to
meet the requirements, and compliance with the terms, of the Drake
Agreement, and any other arrangement while in Chapter 11
proceedings; changes in the Company’s cash needs as compared
to its historical operations and/or its projected budgeted
expenses; adverse litigation; that general economic conditions may
be worse than expected; the availability of equity or debt capital
to finance the Company’s recapitalization; and, as well as
those risks and uncertainties disclosed under the sections entitled
“Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” in the Company’s Form 10-Q filed with the
Securities and Exchange Commission (“SEC”) on September 30,
2020, and similar disclosures in subsequent reports filed
with the SEC.
Item 9.01 Financial Statements and
Exhibits.
(d)
Exhibits.
99.1
Press
Release, dated March 29, 2021
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: March 29,
2021
AEROCENTURY
CORP.
By: /s/ Harold M.
Lyons
Harold M.
Lyons
Sr. Vice President &
Chief Financial Officer