Item 1.01 Entry into a Material Definitive Agreement.
On April 13, 2021, Cargo Aircraft Management, Inc. (the "Issuer"), a
wholly-owned, indirect subsidiary of Air Transport Services Group, Inc.
("ATSG"), completed its offering of $200,000,000 in aggregate principal amount
of 4.750% senior unsecured notes due 2028 (the "Notes"). The Notes were sold
only to persons reasonably expected to be qualified institutional buyers in the
United States pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), and certain investors pursuant to Regulation S under the
Securities Act.
The offering was consummated pursuant to a Purchase Agreement, dated April 7,
2021 (the "Purchase Agreement"), by and among the Issuer, ATSG, certain direct
and indirect subsidiaries of ATSG (the "Subsidiary Guarantors," and together
with ATSG, the "Guarantors"), and Truist Securities, Inc., as representative of
the several initial purchasers of the Notes. The aggregate principal amount of
the Notes increased from $150,000,000 to $200,000,000.
The issue price of the Notes was 102.750% plus accrued interest from February 1,
2021. The yield to worst was 3.960%.
The Issuer will use the proceeds from the offering of the Notes to fund the
repayment of certain revolving loans outstanding under ATSG's and the Issuer's
Third Amended and Restated Credit Agreement, as amended (the "Credit
Agreement"), and to pay fees and expenses in connection with the offering of the
Notes.
Notes and Indenture
The Notes were issued under and are governed by (i) that certain indenture,
dated January 28, 2020 (the "Base Indenture") and (ii) a supplemental indenture,
dated April 13, 2021, by and among the Issuer, ATSG, the Subsidiary Guarantors
and Regions Bank, as trustee ("Trustee") (the "Supplemental Indenture" and
together with the Base Indenture, the "Indenture"). The Notes are fully and
unconditionally guaranteed on a senior unsecured basis by all of the Guarantors.
The Notes are senior unsecured obligations of the Issuer. Interest will be
payable semiannually in arrears on February 1 and August 1 of each year,
commencing August 1, 2021. Interest on the Notes will accrue from February 1,
2021. The Notes will mature on February 1, 2028. The related guarantees are
senior unsecured obligations of the Guarantors.
The Issuer previously issued $500,000,000 aggregate principal amount of its
4.750% Senior Notes due 2028 (the "Existing Notes") under the Base Indenture.
The Notes constitute an issuance of "Additional Notes" (as such term is defined
in the Indenture) under the Indenture. The Notes are fully fungible with the
Existing Notes, treated as a single class for all purposes under the Indenture
with the same terms as those of the Existing Notes (other than the issue date
and issue price). The Existing Notes and the Additional Notes are referred to
herein together as the "Senior Notes").
The Issuer may redeem some or all of the Senior Notes at any time and from time
to time prior to February 1, 2023, at a redemption price equal to 100% of the
principal amount of the redeemed Senior Notes, plus accrued and unpaid interest,
if any, to the redemption date, plus a "make-whole" amount set forth in the
Indenture. On or after February 1, 2023, the Issuer may redeem some or all of
the Senior Notes at the redemption prices set forth in the Indenture. In
addition, prior to February 1, 2023, the Issuer may redeem up to 40% of the
aggregate principal amount of the Senior Notes from the net cash proceeds of one
or more qualified equity offerings completed before February 1, 2023, at a
redemption price equal to 104.750% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the redemption date, provided that at least 60%
of the aggregate principal amount of the Senior Notes remains outstanding after
the redemption and such redemption occurs within 180 days of the date of closing
of such qualified equity offering. If ATSG or the Issuer experience specific
kinds of changes of control described in the Indenture, the Issuer may be
required to make an offer to purchase all or any portion of the Senior Notes at
a purchase price of 101% of the principal amount of the Senior Notes to be
repurchased, plus accrued and unpaid interest, if any, to the date of
repurchase. Certain asset sales may result in the Issuer being required to offer
to purchase a portion of the Senior Notes at a purchase price of 100% of the
principal amount of such Senior Notes plus accrued and unpaid interest, if any,
to the date of repurchase.
The Indenture contains certain covenants that limit the ability of ATSG and the
Restricted Subsidiaries (as defined in the Indenture), including the Issuer, to,
among other things: (i) incur additional indebtedness or issue certain preferred
equity; (ii) pay dividends on, repurchase, or make other distributions in
respect of the capital stock of ATSG or any Restricted Subsidiary or prepay,
redeem, or repurchase certain debt or make any restricted investment; (iii)
create certain liens; (iv) enter into agreements encumbering or restricting the
ability of a Restricted Subsidiary to pay dividends or make distributions, loans
or certain asset transfers; (v) engage in certain transactions with affiliates;
and (vi) consolidate, merge, sell or otherwise dispose of all or substantially
all of the assets of ATSG or the Issuer. These covenants are subject to
exceptions and qualifications as described in the Indenture. If the Senior Notes
receive an investment grade rating from both Standard & Poor's Rating Services
and Moody's Investors Service, Inc., certain of these covenants will be
suspended and no longer apply during the Suspension Period (as defined in the
Indenture) if no default has occurred and is continuing at such time.

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The Senior Notes and the Indenture contain customary events of default,
including, without limitation: (i) failure to pay interest on the Senior Notes
for 30 days after becoming due; (ii) failure to pay principal on the Senior
Notes when due; (iii) failure to comply with any other agreement or covenant in
the Indenture or the Senior Notes and continuance of this failure for 60 days
after notice of the failure has been given by the Trustee or by the holders of
at least 25% of the aggregate principal amount of the Senior Notes then
outstanding; (iv) certain defaults under other mortgages, indentures,
instruments or agreements involving indebtedness in an aggregate amount of $100
million or more; (v) failure by ATSG or any of its Significant Subsidiaries (as
defined in the Indenture) (or group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for Parent
and its Restricted Subsidiaries) would constitute a Significant Subsidiary)
(collectively, "Relevant Entities") to pay final judgments aggregating in excess
of $100 million that have not been satisfied, stayed, annulled or rescinded
within 90 days of becoming final; (vi) certain bankruptcy events of any Relevant
Entity; and (vii) except as permitted by the Indenture, any guarantee of the
Senior Notes by ATSG or any other Relevant Entity ceases to be in full force and
effect or is unenforceable or any Relevant Entity denies its liability under its
guarantee.
Affiliates of one or more of the initial purchasers serve as lenders under the
Credit Agreement and, as such, will receive a portion of the net proceeds from
the offering that are used to fund the repayment of certain revolving loans
under the Credit Agreement.
The Notes have not been registered under the Securities Act or any state
securities laws and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act and applicable state securities laws.
The description above is qualified in its entirety by the Supplemental
Indenture, which is filed with this Form 8-K, and the Base Indenture and Form of
Note, which were previously filed as Exhibits 4.1 and 4.2, respectively, to
ATSG's Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 28, 2020.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. The information regarding the Indenture, including the Supplemental Indenture, and the Notes set for in Item 1.01 above is incorporated by reference into this Item 2.03.




Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.      Description
      4.1*         Supplemental Indenture, dated as of April 13, 2021, among Cargo Aircraft
                 Management, Inc., the guarantors party thereto, and Regions Bank, an Alabama
                 state banking corporation, as trustee.
      104        Cover Page Interactive Data File (embedded within the Inline XBRL document)

*filed herewith.

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