Business Context and Reporting Period
This Form 8-K Current Report was filed by AAR CORP. on January 17, 2012, covering events occurring between January 10, 2012, and January 13, 2012. The filing details the entry into a material definitive agreement regarding a new debt offering.
Key Financial Metrics
- Debt Issuance: $175,000,000 aggregate principal amount of 7.25% senior unsecured notes due 2022.
- Pricing: Notes priced at 98.268% of principal amount.
- Yield to Maturity: 7.50%.
- Net Proceeds: Expected to be $167.3 million after deducting discounts and estimated offering expenses.
- Closing Date: Expected on January 23, 2012.
Material Changes and Use of Proceeds
The primary material change is the execution of a Purchase Agreement for the new notes. AAR intends to use the net proceeds from this offering to repay a portion of borrowings incurred under its revolving credit agreement. These borrowings were originally used to finance the acquisition of Telair International and Nordisk Aviation on December 2, 2011.
Outlook, Risks, and Contingencies
The filing includes forward-looking statements regarding the intention to raise proceeds and the expected use of funds. Management notes that there can be no assurance that the transactions will be completed on anticipated terms or at all. Potential risks include financial market conditions and the final terms of the notes. The notes are being offered to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S.
Investor Verification Checklist
- Verify the final closing of the transaction on or around January 23, 2012.
- Confirm the actual net proceeds received versus the estimated $167.3 million.
- Review the full text of the Purchase Agreement (Exhibit 10.1) for specific covenants and indemnification provisions.
- Monitor subsequent filings to confirm the repayment of the revolving credit facility related to the Telair and Nordisk acquisitions.