Air Transport Services Group, Inc. (NASDAQ: ATSG) today
announced its intention to offer, subject to market and other
conditions, $350,000,000 aggregate principal amount of convertible
senior notes due 2029 (the “notes”) in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). ATSG
also expects to grant the initial purchasers of the notes a 30-day
option to purchase up to an additional $50,000,000 principal amount
of notes.
The notes will be senior, unsecured obligations of ATSG, will
accrue interest payable semi-annually in arrears and will mature on
August 15, 2029, unless earlier repurchased, redeemed or converted.
Noteholders will have the right to convert their notes in certain
circumstances and during specified periods. ATSG will settle
conversions in cash and, if applicable, shares of its common
stock.
The notes will be redeemable, in whole or in part (subject to
certain limitations), for cash at ATSG’s option at any time, and
from time to time, on or after August 15, 2026 and on or before the
50th scheduled trading day immediately before the maturity date,
but only if the last reported sale price per share of ATSG’s common
stock exceeds 130% of the conversion price for a specified period
of time. The redemption price will be equal to the principal amount
of the notes to be redeemed, plus accrued and unpaid interest, if
any, to, but excluding, the redemption date.
If certain corporate events that constitute a “fundamental
change” occur, then noteholders may require ATSG to repurchase
their notes for cash. The repurchase price will be equal to the
principal amount of the notes to be repurchased, plus accrued and
unpaid interest, if any, to, but excluding, the applicable
repurchase date.
The interest rate, initial conversion rate and other terms of
the notes will be determined at the pricing of the offering.
ATSG expects to use a portion of the net proceeds from the
offering to repurchase shares of its common stock concurrently with
the pricing of the offering in privately negotiated transactions
effected through one of the initial purchasers of the notes or its
affiliate, as ATSG’s agent, and to repurchase shares of its common
stock from Amazon.com, Inc. under an existing agreement. ATSG
expects to use a portion of the net proceeds from the offering to
repurchase approximately $200 million aggregate principal amount of
its outstanding 1.125% Convertible Senior Notes due 2024 (the “2024
Notes”) concurrently with the pricing of the offering in privately
negotiated transactions effected through one of the initial
purchasers of the notes or its affiliate, as ATSG’s agent. ATSG
intends to use the remainder of the net proceeds from the offering
to satisfy fees and expenses associated with the offering, to repay
a portion of the outstanding borrowings under its revolving credit
facility and for general corporate purposes. Holders of the 2024
Notes that are repurchased in the concurrent repurchases described
above may purchase shares of ATSG’s common stock in the open market
to unwind any hedge positions they may have with respect to the
2024 Notes. These activities may affect the trading price of ATSG
common stock and, if conducted concurrently with this offering, may
result in a higher initial conversion price for the notes ATSG is
offering. The concurrent repurchases of shares of ATSG’s common
stock described above may result in the common stock trading at
prices that are higher than would be the case in the absence of
these repurchases, which may result in a higher initial conversion
price for the notes. The repurchase of common stock in connection
with the offering will not reduce availability under ATSG’s stock
repurchase program authorized on November 29, 2022.
In connection with issuing the 2024 Notes, ATSG entered into
convertible note hedge transactions (the “existing convertible note
hedge transactions”) and warrant transactions (the “existing
warrant transactions,” and, together with the existing convertible
note hedge transactions, the “existing call spread transactions”)
with certain financial institutions (the “existing option
counterparties”). In connection with ATSG’s intended repurchase of
the 2024 Notes, ATSG expects to enter into agreements with the
existing option counterparties to terminate a portion of such
existing call spread transactions, in each case, in a notional
amount corresponding to the amount of such 2024 Notes repurchased.
In connection with any termination of any of the existing call
spread transactions and the related unwinding of the existing hedge
position of the existing option counterparties with respect to such
transactions, such existing option counterparties and/or their
respective affiliates may sell shares of ATSG’s common stock in the
open market or in secondary market transactions, and/or enter into
or unwind various derivative transactions with respect to ATSG’s
common stock. This hedge unwind activity could decrease (or reduce
the size of any increase in) the market price of ATSG common stock
at that time and it could decrease (or reduce the size of any
increase in) the market value of the notes. In connection with the
unwind of the existing call spread transactions, ATSG may make or
receive payments in amounts that depend on the market value of ATSG
common stock at the pricing of the notes.
The offer and sale of the notes and any shares of common stock
issuable upon conversion of the notes have not been, and will not
be, registered under the Securities Act or any other securities
laws, and the notes and any such shares cannot be offered or sold
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
any other applicable securities laws. This press release does not
constitute an offer to sell, or the solicitation of an offer to
buy, the notes or any shares of common stock issuable upon
conversion of the notes, nor will there be any sale of the notes or
any such shares, in any state or other jurisdiction in which such
offer, sale or solicitation would be unlawful.
About ATSG
ATSG is a leading provider of aircraft leasing and cargo and
passenger air transportation and related services to domestic and
foreign air carriers and other companies that outsource their cargo
and passenger airlift requirements. ATSG, through its leasing and
airline subsidiaries, is the world's largest owner and operator of
converted Boeing 767 freighter aircraft. Through its principal
subsidiaries, including three airlines with separate and distinct
U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft
leasing, air cargo lift, passenger ACMI and charter services,
aircraft maintenance services and airport ground services. ATSG's
subsidiaries include ABX Air, Inc.; Airborne Global Solutions,
Inc.; Airborne Maintenance and Engineering Services, Inc.,
including its subsidiary, Pemco World Air Services, Inc.; Air
Transport International, Inc.; Cargo Aircraft Management, Inc.; and
Omni Air International, LLC. For more information, please see
www.atsginc.com.
Forward-Looking Statements
This press release includes forward-looking statements,
including statements regarding the anticipated terms of the notes
being offered, the completion, timing and size of the proposed
offering and the intended use of the proceeds. Forward-looking
statements represent ATSG’s current expectations regarding future
events and are subject to known and unknown risks and uncertainties
that could cause actual results to differ materially from those
implied by the forward-looking statements. Among those risks and
uncertainties are market conditions, including market interest
rates, the trading price and volatility of ATSG’s common stock and
risks relating to ATSG’s business, including those described in
periodic reports that ATSG files from time to time with the SEC.
ATSG may not consummate the proposed offering described in this
press release and, if the proposed offering is consummated, cannot
provide any assurances regarding the final terms of the offering or
the notes or its ability to effectively apply the net proceeds as
described above. The forward-looking statements included in this
press release speak only as of the date of this press release, and
ATSG does not undertake to update the statements included in this
press release for subsequent developments, except as may be
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20230809098360/en/
Quint O. Turner, Chief Financial Officer Air Transport Services
Group, Inc. 937-366-2303
Air Transport Services (NASDAQ:ATSG)
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