Business Context and Reporting Period
This Form 8-K was filed by Yellowstone Acquisition Company on August 25, 2021, regarding its proposed business combination with Sky Harbour LLC. The filing reports developments related to Sky Harbour’s financing plan and the proposed transaction; it does not present periodic operating results.
Key Financial and Transaction Metrics
- Private activity bond financing: Sky Harbour Capital LLC entered into an agreement for approximately $166.34 million of unrated, senior, fixed-rate, tax-exempt bonds.
- Bond yields and maturities: Bonds were priced to yield 3.80% due 2036, 4.00% due 2041, and 4.25% due 2054. Principal amortization is expected from 2032 through 2054, with an average life of approximately 24 years.
- Equity contribution: Sky Harbour expects to contribute $68 million in equity to the bond Obligated Group.
- Boston Omaha investment: BOC YAC Funding LLC has agreed to invest $55 million in Sky Harbour. Upon completion of the business combination, the investment is expected to convert into 5.5 million shares of the post-combination company’s Class A common stock at $10.00 per share.
- Use of proceeds: The equity contribution and bond proceeds are expected to refinance existing debt and fund development at five airports, involving eight existing hangars and 74 new hangars.
- Operating metrics: The filing does not provide revenue, profit, cash flow, margins, debt balances before refinancing, or liquidity figures.
Material Changes Versus the Prior Comparable Period
The filing does not provide comparable-period financial results. The material developments are the proposed $166.34 million bond financing, the planned $68 million equity contribution, and the $55 million Boston Omaha investment connected with the proposed business combination.
Guidance, Outlook, Risks, and Unusual Items
- The bonds were expected to be issued on or about September 14, 2021, subject to customary closing conditions.
- The Boston Omaha investment was funded into escrow and is contingent on Sky Harbour raising at least $80 million in a private activity bond offering. If the business combination is not completed, the investment is expected to remain as Series B preferred units of Sky Harbour.
- The bond proceeds are secured by the property and revenues of Sky Harbour Capital and specified subsidiaries, which form an Obligated Group with joint and several obligations.
- Completion of the business combination remains subject to stockholder approval and other closing conditions. Additional risks include failure to complete the bond financing, potential litigation, Nasdaq listing risks, execution and growth risks, competition, transaction costs, regulatory changes, and possible future dilution.
- The filing contains forward-looking statements and directs investors to the preliminary proxy statement, offering statement, and other SEC filings for additional information. The filing does not provide management earnings guidance.
Important Facts for Investors to Verify
- Whether the business combination between Yellowstone and Sky Harbour closes and the applicable closing conditions.
- Whether the approximately $166.34 million bond offering is issued on the expected timetable and on the stated terms.
- Whether the required minimum $80 million private activity bond financing is raised and the $55 million Boston Omaha investment is released from escrow.
- The final use of proceeds, refinancing amounts, construction schedule, and funding requirements for the planned airport developments.
- The financial condition, operating performance, debt obligations, security package, and covenants of the Obligated Group, as described in the final offering documents.
- The final proxy statement for transaction terms, dilution, ownership, risks, and required stockholder approvals.