Item 1.01. |
Entry into a Material Definitive Agreement. |
Amendment to Revolving Line of Credit
Mesa Air Group, Inc.’s (the “Company”) wholly owned subsidiaries, Mesa Airlines, Inc. (“Mesa”) and Mesa Air Group Airline Inventory Management, L.L.C. (“Mesa Inventory Management” and, together with Mesa, the “Borrowers”), previously entered into a Second Amended and Restated Credit and Guaranty Agreement dated as of June 30, 2022 (as amended by Amendment No. 1 to Second Amended and Restated Credit and Guaranty Agreement, dated as of December 27, 2022, Amendment No. 2 to Second Amended and Restated Credit and Guaranty Agreement, dated as of January 27, 2023, and Amendment No. 3 Second Amended and Restated Credit and Guaranty Agreement, dated as of September 6, 2023, the “Existing Credit Agreement”), with Wilmington Trust, National Association (“WTNA”) (as successor to CIT Bank, a division of First-Citizens Bank & Trust Company), in its capacity as Administrative Agent, WTNA (as successor to First-Citizens Bank & Trust Company (as successor by merger to CIT Bank, N.A.)), as collateral agent and the lenders from time to time party thereto, which is guaranteed by the Company. As previously reported, United Airlines, Inc. (“United”) purchased and assumed all of CIT Bank’s rights and obligations under the Existing Credit Agreement pursuant to a separate Assignment and Assumption Agreement and in connection with entering into the Third Amended and Restated Capacity Purchase Agreement with United, dated as of December 27, 2022 (the “United CPA”).
On January 11, 2024, the Company entered into Amendment No. 4 to the Existing Agreement, Amendment No. 1 to Stock Pledge Agreement and Limited Waiver of Conditions to Credit Extension United (collectively, “Amendment No. 4”) which provides for the following: (i) the repayment in full of the Company’s $10.5 million Effective Date Bridge Loan (as defined therein) obligations, and the prepayment (and corresponding reduction) of approximately $2.1 million in Revolving Loans (as defined therein), with the proceeds from the sale, assignment, or transfer of the Company’s vested investment in Heart Aerospace Incorporated (“Heart”), originally purchase by the Company for $5.0 million, (ii) as a result of the repayment of the Effective Date Bridge Loan and pay down of the Revolving Loans, the shares of capital stock of Archer Aviation, Inc. (“Archer”) held by the Company were released as collateral for the Existing Credit Facility, and (iii) the waiver of a financial covenant default with respect to the fiscal quarters ended June 30, 2023 and September 30, 2023. After giving effect to the foregoing transactions, the Company retained 222,222 unvested “penny” warrants in Heart and 2.27 million vested shares of common stock and 1.17 million unvested “penny” warrants in Archer.
Amendment to United Capacity Purchase Agreement
On January 11, 2024, the Company also entered into the First Amendment to Third Amended and Restated United CPA (the United CPA Amendment”), which provides for the following: (i) increased block-hour rates, retroactive to October 1, 2023 through December 31, 2024, which are projected to generate approximately $63.5 million in incremental revenue over the next twelve months; (ii) amended certain notice requirements for removal by United of up to eight CRJ-900 Covered Aircraft (as defined in the United CPA) from the United CPA, and (iii) extended United’s existing utilization waiver for the Company’s operation of E-175 and CRJ-900 Covered Aircraft (as defined in the United CPA) to June 30, 2024.
The foregoing descriptions of Amendment No. 4, the United CPA Amendment, and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of such documents, which we expect to file as exhibits to our Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2024, subject to any applicable requests for confidential treatment with respect to certain portions of such agreements.