Air T Inc. (NASDAQ:AIRT), an air courier services provider, has entered into a material definitive agreement and completed significant asset acquisitions, as per the latest SEC filing. On Monday, the company, through its subsidiary CASP Leasing I, LLC, finalized the purchase of two aircraft, an Airbus A320 and an Airbus A321, with a combined value exceeding $18 million. This acquisition aligns with the company's strategy to purchase aircraft for leasing or disassembly for parts sales.
To facilitate this acquisition, Air T secured financing from Old National Bank (ONB), executing several financial documents including an amendment to the Master Loan Agreement and a new term loan. The term loan, labeled Term Note J, amounts to $10 million with a variable interest rate pegged to the 1-month SOFR Rate plus 3.86%.
The loan is set to mature on September 12, 2028, and requires monthly payments of principal and interest. Additionally, Air T must adhere to certain financial covenants, maintaining a minimum Tangible Net Worth of $15 million and a Quarterly Cash Flow Coverage ratio of at least 1.25 to 1.0.
In conjunction with the loan, a subordination agreement was entered into to prioritize the repayment of Air T's debt to ONB over other subordinate debts. These financial maneuvers underscore the company's commitment to expanding its leasing and parts sales business.
The details of these transactions are outlined in the exhibits of the Current Report on Form 8-K filed on September 5, 2024, which are referenced in the recent filing. The information from this SEC filing provides a transparent view of Air T's latest financial and acquisition activities.
In other recent news, Air T Inc announced a significant expansion of its fleet through the acquisition of two Airbus Model A321-111 aircraft, valued at over $18 million. This strategic move by the company aims to bolster its aircraft leasing and parts sales business. However, the company indicated that the projected closing date is subject to change, and there is no absolute certainty that the purchases or subsequent lease agreements will be completed as planned.
In other recent developments, the company held its 2024 Annual Meeting of Stockholders, with 90% of the outstanding shares represented. The meeting led to several key decisions, including the successful election of all director nominees and the approval of executive officers' compensation. Additionally, the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year 2025 was ratified by the shareholders.
Furthermore, Brian Ochocki, the Chief Financial Officer of Air T Inc, is set to step down from his role around September. During his five-year tenure, Ochocki contributed significantly to the company's growth, enhancing finance and accounting operations, and executing numerous financing and mergers and acquisitions transactions. In the interim, Tracy Kennedy, the current Chief Accounting Officer, will oversee the financial operations.
InvestingPro Insights
As Air T Inc. (NASDAQ:AIRT) continues to expand its aircraft leasing and parts sales operations, recent metrics and insights from InvestingPro can offer an additional perspective on the company's financial health and market position. With a market capitalization of $55.48 million, the company's aggressive growth tactics are reflected in a high Price / Book multiple of 13.32, suggesting a significant valuation by the market relative to its book value. Despite this, the company's revenue has shown resilience with a growth of 5.2% over the last twelve months as of Q1 2023.
InvestingPro Tips indicate that the stock is currently in oversold territory, which could interest investors looking for potential entry points. However, it's important to note that the company has not been profitable over the last twelve months and is trading at high EBIT and EBITDA valuation multiples. While Air T's liquid assets exceed its short-term obligations, providing some financial stability, the lack of dividend payments might be a consideration for income-focused investors. For those interested in a deeper dive, there are additional tips available on InvestingPro, providing a comprehensive analysis of Air T's financials and market potential.
Investors monitoring Air T's performance will also note the significant EBITDA growth of 4386.76% over the last twelve months as of Q1 2023, a remarkable increase that could signal operational efficiencies or one-time gains. With the next earnings date scheduled for November 13, 2024, stakeholders will be keen to see if the company's strategic acquisitions and financing efforts will translate into sustained profitability and shareholder value.
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