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MarketScreener Homepage  >  Equities  >  Nyse  >  AAR Corp.    AIR

AAR CORP.

(AIR)
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AAR CORP : Entry into a Material Definitive Agreement, Financial Statements and Exhibits (form 8-K)

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07/31/2020 | 04:06pm EDT

Item 1.01. Entry into a Material Definitive Agreement.

On July 30, 2020, AAR Aircraft Services, Inc., Aviation Maintenance Staffing, Inc., and AAR Landing Gear LLC, direct and indirect wholly-owned subsidiaries (the "Subsidiaries") of AAR CORP. (the "Company"), entered into a Payroll Support Program Agreement (the "PSP Agreement") with the U.S. Department of the Treasury ("Treasury") with respect to the grant program (the "Payroll Support Program") under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). On April 3, 2020, the Company applied for $136,446,791.00 of payroll support under the Payroll Support Program.

Payroll Support Program Agreement

Pursuant to the PSP Agreement, the Subsidiaries expect to receive from Treasury$57,180,647.00 in the aggregate. The funding is expected to be disbursed in two installments: 75% ($42,885,485.00) on the closing date (the "Initial Disbursement"), which was received on July 30, 2020 (the "Closing Date"), and one additional disbursement of 25% on August 31, 2020.

In connection with the receipt of financial assistance under the Payroll Support Program, the Subsidiaries are required to comply with the relevant provisions of the CARES Act, including the requirement that the funding be used exclusively for the continuation of payment of employee wages, salaries and benefits. The Subsidiaries will also be subject to certain restrictions, including, but not limited to, limitations on involuntary terminations and furloughs and reductions in the pay rate of employees earning wages or salaries (as well as reductions in benefits) from the signing date of the PSP Agreement through September 30, 2020. In addition, the Subsidiaries and the Company are required to eliminate the payment of dividends and the repurchase of shares through September 30, 2021, and are subject to certain limitations on employee compensation through March 24, 2022.




Promissory Note



As compensation to Treasury for the provision of financial assistance under the PSP Agreement, the Company issued Treasury a promissory note that is guaranteed by certain of the Company's subsidiaries, including the Subsidiaries (the "Promissory Note"). In connection with the Initial Disbursement, the Promissory Note was issued at an initial principal amount of $2,369,613.00. Upon the subsequent disbursement of payroll support to the Subsidiaries, the principal amount of the Promissory Note will be increased in an amount equal to 44% of any disbursement in excess of $37,500,000.00, up to a principal amount of $8,659,485.00. The Promissory Note will bear interest at a rate per annum equal to the sum of (i) 1.00% until the fifth anniversary of the Closing Date, and the applicable secured overnight financing rate plus 2.00% thereafter until the tenth anniversary of the Closing Date (the "Maturity Date"), which is payable in cash, plus (ii) 3.0% until the fifth anniversary of the Closing Date, and increasing by 1.0% each anniversary thereafter until the Maturity Date (the "PIK Interest Rate"), which may be paid either in cash or in kind. If the Company does not elect to pay such PIK Interest Rate amount in cash, the principal amount of the Promissory Note will be increased by such amount. The Company may, at any time, make voluntary prepayments of amounts due under the Promissory Note without penalty or premium.

The Promissory Note is the Company's senior unsecured obligation. It contains certain events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness. Subject to certain grace periods, upon the occurrence of an event of default, the outstanding obligations under the Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately.



                                       2

Item 9.01. Financial Statements and Exhibits.




(d)    Exhibits





Exhibit No.                                 Description
   10.1        Payroll Support Agreement dated July 30, 2020 by and between AAR
               Aircraft Services, Inc., Aviation Maintenance Staffing, Inc., AAR
               Landing Gear LLC, and the United States Treasury.

    104        Cover Page Interactive Data File (the cover page XBRL tags are
               embedded in the inline XBRL document)




                                       3

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 1 728 M - -
Net income 2021 4,29 M - -
Net Debt 2021 200 M - -
P/E ratio 2021 -119x
Yield 2021 -
Capitalization 599 M 599 M -
EV / Sales 2021 0,46x
EV / Sales 2022 0,36x
Nbr of Employees 4 800
Free-Float 73,1%
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Mean consensus OUTPERFORM
Number of Analysts 6
Average target price 22,50 $
Last Close Price 17,22 $
Spread / Highest target 51,0%
Spread / Average Target 30,7%
Spread / Lowest Target 4,53%
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NameTitle
John M. Holmes President, Chief Executive Officer, COO & Director
David P. Storch Non-Executive Chairman
Sean M. Gillen Chief Financial Officer & Vice President
Marc Jay Walfish Independent Director
Ronald B. Woodard Independent Director
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