Financing Arrangements

6 Months Ended

Sep. 30, 2020

Borrowings of the Company and its subsidiaries are summarized below (in thousands) at September 30, 2020 and March 31, 2020, respectively.

On April 10, 2020, the Company entered into a loan with MBT in a principal amount of $8.2 million pursuant to the PPP Loan under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is evidenced by a promissory note (“Note”). The Note provides for customary events of default including, among other things, cross-defaults on any other loan with MBT. The PPP Loan may be accelerated upon the occurrence of an event of default.

The PPP Loan is unsecured and guaranteed by the United States Small Business Administration. The Company will apply to MBT for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the 24-week period beginning on April 10, 2020, calculated in accordance with the terms of the CARES Act. The PPP Loan bears interest at a fixed annual rate of one percent (1%). Once the forgiveness determination is made, the Company will be required to make repayments plus interest on any unforgiven amount. As of September 30, 2020, the Company has used the funds received from the PPP loan on eligible expenses as outlined in the CARES Act.

On September 25, 2020, Contrail entered into a Third Amendment to Supplement #2 to Master Loan Agreement dated June 24, 2019 with ONB. The material changes within the Third Amendment are: (a) to extend the date for compliance with the provision where Contrail is required to pay down the total outstanding principal balance of its revolver to zero for at least thirty consecutive days to September 5, 2021; and (b) to extend the date for compliance with the required quarterly debt service coverage ratio covenant such that Contrail shall commence compliance with the covenant commencing on March 31, 2022 and on the last day of each fiscal quarter thereafter.

In addition, the Third Amendment adds an event of default to the Master Loan Agreement if Contrail does not consummate the $43.6 million loan transaction under the Main Street Priority Loan Facility Program established by the Fed by December 31, 2020. As of the issuance date of this report, the loan transaction has been finalized with ONB, however, the financing is in escrow pending final approval from the Fed. As the Fed's approval has not yet been granted as of the issuance date of this report, no assurance can be given at this time that this financing will be completed and funded.


(In Thousands)	September 30, 2020		March 31, 2020		Maturity Date	Interest Rate	Unused commitments
Air T Debt
Revolver - MB&T	$	942	$	—	August 31, 2021	Greater of 2.5% or Prime - 1%	$	16,058
Supplemental Revolver- MBT	—		9,550		June 30, 2020	Greater of 1-month LIBOR + 1.25% and 3%
Term Note A - MB&T	7,250		7,750		January 1, 2028	1-month LIBOR + 2%
Term Note B - MB&T	3,625		3,875		January 1, 2028	4.50%
Term Note D - MB&T	1,506		1,540		January 1, 2028	1-month LIBOR + 2%
Term Note E - MBT	8,451		—		June 25, 2025	Greater of LIBOR + 1.5% or 2.5%
Debt - Trust Preferred Securities	12,877		12,877		June 7, 2049	8.00%
PPP Loan	8,215		—		April 10, 2022	1.00%
Total	42,866		35,592

AirCo 1 Debt
Revolver - MB&T	7,500		8,335		August 31, 2021	Greater of 6.50% or Prime + 2%	—
Total	7,500		8,335

Contrail Debt
Revolver - ONB	21,764		21,284		September 5, 2021	1-month LIBOR + 3.45%	18,236
Term Loan A - ONB	5,602		6,285		January 26, 2021	1-month LIBOR + 3.75%
Term Loan E - ONB	5,171		6,320		December 1, 2022	1-month LIBOR + 3.75%
Term Loan F - ONB	7,933		8,358		May 1, 2025	1-month LIBOR + 3.75%
Total	40,470		42,247

Delphax Solutions Debt
Canadian Emergency Business Account Loan	30		—		December 31, 2025	5.00%
Total	30		—

Total Debt	90,866		86,174

Less: Unamortized Debt Issuance Costs	(253)		(354)
Total Debt, net	$	90,613	$	85,820

At September 30, 2020, our contractual financing obligations, including payments due by period, are as follows (in thousands):


Due by	Amount
September 30, 2021	$	46,363
September 30, 2022	8,791
September 30, 2023	3,842
September 30, 2024	3,267
September 30, 2025	11,152
Thereafter	17,451
	90,866
Less: Unamortized Debt Issuance Costs	(253)
	$	90,613

On June 10, 2019, the Company completed a transaction with all holders of the Company’s Common Stock to receive a special, pro-rata distribution of three securities as enumerated below:

•A dividend of one additional share for every two shares already held (a 50% stock dividend, or the equivalent of a 3-for-2 stock split). See Footnote 6 for discussion.

•The Company issued and distributed to existing common shareholders an aggregate of 1.6 million trust preferred capital security ("TruPs") shares (aggregate $4.0 million stated value) and an aggregate of 8.4 million warrants ("Warrants") (representing warrants to purchase $21.0 million in stated value of TruPs).

On January 14, 2020, Air T effected a one-for-ten reverse split of its TruPs. As a result of the reverse split, the stated value of the TruPs will be $25.00 per share. Further, each Warrant conferred upon its holder the right to purchase one-tenth of a share of TruPs for $2.40, representing a 4% discount to the new stated value of $2.50 for one-tenth of a share. As of September 30, 2020, 3.6 million Warrants have been exercised. As a result, the amount outstanding on the Company's Debt - Trust Preferred Securities is $12.9 million as of September 30, 2020.

At September 30, 2020, the Company had Warrants outstanding and exercisable to purchase 4.8 million shares of its TruPs at an exercise price of $2.40 per per one-tenth of a share. On September 2, 2020, the Company announced the extension of the expiration date of the Warrants. The Warrants, previously scheduled to expire on September 8, 2020, are extended and now will expire on January 15, 2021 or earlier upon redemption or liquidation.


	Fair Value Measurement as of September 30, 2020
Warrant liability (Level 2)	$	485

As of September 30, 2020, the Warrants are recorded within "Other non-current liabilities" on our condensed consolidated balance sheets. Fair value measurement was based on market activity and trading volume as observed on the NASDAQ Global Market. The liability is classified as Level 2 in the hierarchy (Level 2 is defined as quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability).