FINANCING ARRANGEMENTS |
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| FINANCING ARRANGEMENTS | NOTE L - FINANCING ARRANGEMENTS Outstanding debt obligations as of December 31, 2025 and 2024 consisted of the following (in thousands):
At December 31, 2025 and 2024, total deferred financing costs were $1.0 million and $1.3 million, respectively. Amortized debt issuance costs are recorded in interest expense through maturity of the related debt using the straight-line method, which approximates the effective interest method. Amortization expense was as follows (in thousands):
$180.0 million Wells Fargo Senior Secured Revolving Credit Facility On July 20, 2018, our subsidiary, AerSale, Inc. and other subsidiary borrowers entered in a secured amended and restated Revolving Credit Agreement (as amended, the “Revolving Credit Agreement”). The Revolving Credit Agreement initially provided for a $110.0 million aggregate amount of revolver commitments subject to borrowing base. The Revolving Credit Agreement included a $10.0 million sub facility for letters of credit and for borrowings on same-day notice referred to as “swingline loans”. The maximum amount of such commitments available at any time for borrowings and letters of credit is determined according to a borrowing base calculation equal to the sum of eligible inventory and eligible accounts receivable reduced by the aggregate amount, if any, of trade payables of the loan parties, as defined in the Revolving Credit Agreement. Extensions of credit under the Revolving Credit Agreement are available for working capital and general corporate purposes. On March 9, 2023, we amended the Revolving Credit Agreement to replace the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). On July 25, 2023, the Revolving Credit Agreement was amended to increase the maximum commitments thereunder to $180.0 million aggregate amount, expandable to $200.0 million, subject to conditions and the availability of lender commitments and borrowing base limitations, and the maturity date was extended to July 24, 2028. As of December 31, 2025, the Company had $67.2 million of availability, subject to borrowing base limitations. The obligations of AerSale, Inc. under the Revolving Credit Agreement are guaranteed by the Company, and other subsidiaries of AerSale, Inc. may be designated as borrowers on a joint and several basis. Such obligations are also secured by substantially all of the assets of the Company. The interest rate applicable to loans outstanding on the Revolving Credit Agreement is a floating rate of interest per annum of plus a margin of 2.25% to 2.75%. The applicable interest rate as of December 31, 2025 and 2024, was 6.62% and 7.52%, respectively. Interest expense on the Revolving Credit Agreement was as follows (in thousands):
The Company’s ability to borrow on the Revolving Credit Agreement is subject to ongoing compliance by the Company with various customary affirmative and negative covenants. The Revolving Credit Agreement requires the Company to meet certain financial and nonfinancial covenants. The Company was in compliance with these covenants as of December 31, 2025 and 2024. $10.0 million CIBC Property and Equipment Revolving Term Loan On November 22, 2024, the Company entered into a property and equipment revolving term loan (the “CIBC Equipment Loan”) with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of plus 3.0% and have a maturity date of thirty-six (36) months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required. Effective November 30, 2025, we amended the CIBC Equipment Loan to extend the term of the advance commitment until November 30, 2026 and reduce the total advance commitment to $2.5 million. During the year ended December 31, 2025, the Company borrowed an additional $1.2 million under this facility, which was converted to a term loan maturing on September 25, 2028. As of December 31, 2024, borrowings under this facility were converted to a term loan maturing on December 23, 2027. The effective rate on this facility as of December 31, 2025 and 2024 was 6.84% and 7.37%, respectively. Maturities of the Equipment Loan as of December 31, 2025 are as follows (in thousands):
The Equipment Loan is subject to ongoing compliance by the Company in the form of various customary affirmative and negative covenants, as well as certain financial covenants. The Company was in compliance with these covenants as of December 31, 2025 and 2024. |
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