XML 81 R23.htm IDEA: XBRL DOCUMENT v3.23.2
FINANCING ARRANGEMENTS
 12 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
FINANCING ARRANGEMENTS FINANCING ARRANGEMENTS
Borrowings of the Company and its subsidiaries are summarized below at March 31, 2023 and March 31, 2022, respectively.

On June 9, 2022, the Company, Jet Yard and MBT entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (“Amendment”) and a related Overline Note (“Overline Note”) in the original principal amount of $5.0 million. The Amendment and Note memorialize an increase to the amount that may be drawn by the Company on the MBT revolving credit agreement from $17.0 million to $22.0 million. The borrowing base calculation methodology remains unchanged.

The interest rate on borrowings under the facility that are less than $17.0 million remains at the greater of 2.50% or Prime minus 1.00%. The interest rate applicable to borrowings under the facility that exceed $17.0 million is the greater of 2.50% or Prime plus 0.50%. The commitment fee on unused borrowings below $17.0 million remains at 0.11%. The commitment fee on unused borrowings above $17.0 million is 0.20%. The Amendment also includes an additional covenant to the credit agreement, namely the requirement that the Company provide inventory appraisals for AirCo, AirCo Services and Worthington to MBT twice a year.

Each of the Company subsidiaries that has guaranteed the MBT revolving facility executed a guaranty acknowledgment in which they agreed to guaranty the Overline Note and acknowledged, among other things, that the Overline Note would not impair the lenders rights under the previously executed guaranty or security agreement.

The Overline Note and commitment matures on the earlier of March 31, 2023 or the date on which the Company receives all funds from the Company’s Employee Retention Credit ("ERC") application (estimated at approximately $9.1 million) plus the full receipt of the Company’s carryback tax refund for the year (estimated at approximately $2.6 million). As of March 31, 2023, the Overline Note was paid in full and terminated.

On September 30, 2022, the Company executed a promissory note payable to CCI ("Promissory Note - CCI") for $2.0 million that bears interest at 10.00% per annum and matured on December 30, 2022. As of December 31, 2022, this note has been repaid without penalty.

On November 8, 2022, Contrail entered into the Second Amendment to Master Loan Agreement (the “Amendment”) with ONB. The Amendment amends the Master Loan Agreement dated as of June 24, 2019, as amended. The principal revisions made in the Amendment are: (i) the tangible net worth covenant was revised to require that Contrail maintain a tangible net worth of at least $12.0 million at all times prior to March 31, 2024 and $15.0 million at all times on or following March 31, 2024; and, (ii) that all proceeds from certain asset sales during the period beginning on October 1, 2022 and ending on March 31, 2023 be applied as prepayments on Term Loan G. Contrail executed a Collateral Assignment of two Aircraft engines in connection with the Amendment.

On January 31, 2022 the Company funded the WASI acquisition through (i) a promissory note to Worldwide Aviation, LLC, (ii) cash, and (iii) an additional secured loan from MBT. The promissory note to Worldwide Aviation, LLC in the amount of $1.5 million bears a fixed interest rate of 6.00% and is payable via periodic payments up to the January 1, 2026 maturity date. In connection with the acquisition, the Company and Jet Yard entered Amendment No. 2 to the Third Amended and Restated Credit Agreement (“Amendment No. 2”) with MBT. Amendment No. 2 amends the Third Amended and Restated Credit Agreement dated as of August 31, 2021 as amended by that certain Amendment No. 1 to the Third Amended and Restated Credit Agreement dated June 9, 2022. Amendment No. 2 provides for a new term loan (“Term Loan F”) in the amount of $1.0 million to help finance a portion of the consideration paid by the Company for WASI. Pursuant to the amendment, the Company executed Term Note F in favor of MBT in the original principal amount of $1.0 million. The note bears interest at a rate equal to the greater of six percent (6.00%) or the prime rate plus one percent (1.00%). The note obligates the Company to make monthly payments of principal plus accrued interest commencing March 1, 2023. The note may be prepaid, in whole or part, at any time without penalty and final payment of all amounts due under the note is due January 31, 2028.

On March 22, 2023, Contrail entered into the First Amendment to Second Amendment to Master Loan Agreement and Third Amendment to Master Loan Agreement ("the Amendment") with ONB. The Amendment amends the Master Loan Agreement dated June 24, 2019 with principal revisions to: (i) Section 3 of the Second Amendment was revised so that exclusion of certain gains and losses from the definition of “net income” applies through September 30, 2023, not March 31, 2023; (ii) Section 5 of the Second Amendment relating to prepayment of Term Loan G was amended to eliminate the requirement that all asset sales during the period beginning with October 1, 2022 and ending on March 31, 2023 be applied as prepayments on Term Loan G; instead, the Amendment provision now reflects the agreement that voluntary payments totaling $20.0 million would be made by the borrower on Term Loan G no later than September 30, 2023; and, (iii) a revolving note resting period covenant was added to the Amendment whereby the outstanding principal balance on the revolving note would be paid to zero (0) for at least thirty (30) consecutive days during each annual period ending on the anniversary date of the revolving note, provided the borrower has not achieved a debt service coverage ratio of 1.10:1. As mentioned in Note 9, during the quarter ended March 31, 2023, Contrail made a prepayment of $6.7 million on Term Loan G without penalty.

The following table provides certain information about the current financing arrangements of the Company's and its subsidiaries as of March 31, 2023 and 2022:

(In Thousands)March 31, 2023March 31, 2022Maturity DateInterest RateUnused commitments
Air T Debt
Revolver - MBT$8,742 $10,969 8/31/20232
Greater of 2.50% or Prime - 1.00%
$8,258 
Overline Note - MBT— — 3/31/20233
Greater of 2.50% or Prime + 0.50%
Term Note A - MBT7,762 8,542 8/31/20313.42%
Term Note B - MBT2,740 3,014 8/31/20313.42%
Term Note D - MBT1,338 1,405 1/1/2028
1-month LIBOR + 2.00%
Term Note E - MBT800 2,316 6/25/2025
Greater of LIBOR + 1.50% or 2.50%
Term Note F - MBT983 — 1/31/2028
Greater of 6.00% or Prime + 1.00%
Promissory Note - CCI— — 12/30/202210.00%
Debt - Trust Preferred Securities25,598 25,567 6/7/20498.00%
Total47,963 51,813 
AirCo 1 Debt
Term Loan - Park State Bank ("PSB")6,393 6,393 12/11/2025
3-month LIBOR + 3.00%4
Total6,393 6,393 
Jet Yard Debt
Term Loan - MBT1,844 1,943 8/31/20314.14%
Total1,844 1,943 
Contrail Debt
Revolver - ONB12,441 3,843 9/5/2023
1-month LIBOR + 3.45%5
12,559 
Term Loan G - ONB38,180 44,918 11/24/2025
1-month LIBOR + 3.00%6
Term Loan H - ONB— 8,698 8/18/2023
Wall Street Journal (WSJ) Prime Rate + 0.75%
Total50,621 57,459 
Delphax Solutions Debt
Canadian Emergency Business Account Loan30 32 12/31/20255.00%
Total30 32 
Wolfe Lake Debt
Term Loan - Bridgewater9,586 9,837 12/2/20313.65%
Total9,586 9,837 
Air T Acquisition 22.1
Term Loan - Bridgewater4,500 5,000 2/8/20274.00%
Term Loan A - ING2,610 3,341 2/1/20273.50%
Term Loan B - ING1,088 1,114 5/1/20274.00%
Total8,198 9,455 
WASI Debt
Promissory Note - Seller's Note1,279 — 1/1/20266.00%
Total1,279 — 
Total Debt125,914 136,932 
Unamortized Debt Issuance Costs(829)(1,124)
Total Debt, net$125,085 $135,808 
Fiscal 2023's weighted average interest rate on short term borrowings outstanding was 7.77% . The weighted average interest rate on short term borrowings outstanding as of March 31, 2022 was 3.90%.
The Air T revolving credit facility and the Contrail revolving credit facility contain affirmative and negative covenants, including covenants that restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, make changes in the nature of its business, and engage in transactions with affiliates.

The obligations of Contrail under the Contrail Credit Agreement with ONB are secured by a first-priority security interest in substantially all of the assets of Contrail. The obligations of Contrail under the Contrail Credit Agreement are also guaranteed by the Company, up to a maximum of $1.6 million, plus costs of collection. The Company is not liable for any other assets or liabilities of Contrail and there are no cross-default provisions with respect to Contrail’s debt in any of the Company’s debt agreements with MBT.
At March 31, 2023, our contractual financing obligations, including payments due by period, are as follows (in thousands):
Fiscal year endedAmount
2024$38,736 
202510,878 
202627,034 
20275,538 
20284,016 
Thereafter39,712 
125,914 
Unamortized Debt Issuance Costs(829)
$125,085 
The Company assumes various financial obligations and commitments in the normal course of its operations and financing activities. Financial obligations are considered to represent known future cash payments that the Company is required to make under existing contractual arrangements such as debt and lease agreements.
Fair Value of Debts - As of March 31, 2023 and 2022, the carrying amounts reported in the consolidated balance sheets for the Company’s debt instruments approximate the fair values. Estimated fair values are determined by comparing current borrowing rates and risk spreads offered in the market (Level 2 fair value measures) or quoted market prices (Level 1 fair value measures), when available, to the stated interest rates and spreads on the Company’s debts.
Interest Expense, net - The components of net interest expense during the years ended March 31, 2023 and March 31, 2022 are as follows (in thousands):

March 31, 2023March 31, 2022
Contractual interest$7,932 $4,808 
Amortization of deferred financing costs331 367 
Interest income(328)(227)
Total$7,935 $4,948