Temas Resources (CSE:TMAS)
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TIMCO Aviation Services, Inc. Announces Intent to Offer Premium
for Early Conversion of Its Outstanding Senior and Junior Subordinated
Convertible PIK Notes Into Common Stock
GREENSBORO, N.C., Dec. 21 /PRNewswire-FirstCall/ -- TIMCO Aviation Services,
Inc. (OTC:TMAS) (BULLETIN BOARD: TMAS) today announced that it intends to
offer to the holders of its 8% senior subordinated convertible PIK notes due
2006 ("Senior Notes") and to the holders of its 8% junior subordinated
convertible PIK notes due 2007 ("Junior Notes", and collectively with the
Senior Notes, the "Notes") the right to receive a 15% premium for agreeing to
an early conversion of their Notes into shares of the Company's authorized but
unissued common stock ("Common Stock"). An offering circular and related
documents with respect to the tender offer are expected to be filed by the
Company and distributed to the holders of the Notes in the near future.
The indentures relating to the Senior Notes and the Junior Notes provide that
unless the Senior Notes and the Junior Notes are redeemed prior to their
maturity, the Senior Notes (including all previously issued PIK interest and
all accrued but unpaid interest) will automatically convert at their maturity
into 270.3 million shares of Common Stock and the Junior Notes (including all
previously issued PIK interest and all accrued but unpaid interest) will
automatically convert at their maturity into 9.3 million shares of Common
Stock. Based on available information, the Company does not anticipate that the
Notes will be redeemed prior to their maturity and, as a result, the Company
anticipates that the Notes will automatically convert into Common Stock at
their maturity.
If the early conversion were to occur on December 31, 2004, holders of $1,000
in principal amount of Senior Notes, including PIK interest thereon and any
accrued but unpaid interest, who elected to convert their Notes in the offer
would receive the approximately 2,164 shares of Common Stock that they would
otherwise have received upon conversion of their Senior Notes into Common Stock
at their maturity (December 31, 2006), plus a conversion premium equal to
approximately 324 shares of Common Stock. If the early conversion were to
occur on December 31, 2004, holders of $1,000 in principal amount of Junior
Notes, including PIK interest thereon and any accrued but unpaid interest, who
elected to convert their Notes in the offer would receive the approximately
1,965 shares of Common Stock that they would otherwise have received upon
conversion of their Junior Notes into Common Stock at their maturity (January
2, 2007), plus a conversion premium equal to approximately 294 shares of Common
Stock. It is not expected that the offer will require any minimum number of
Notes to be tendered, and holders of Notes who elect not to convert their Notes
in the offer will continue to hold their Notes, which will automatically
convert by their terms into Common Stock at their maturity without the payment
of any premium.
Lacy Harber, the Company's majority shareholder and the holder of $20.3 million
of the outstanding Senior Notes (approximately 17% of the outstanding Senior
Notes), has advised the Company that he intends to convert his Notes in the
offer. Further, Mr. Harber, who holds a warrant to purchase, for nominal
consideration, that number of shares of the Common Stock which is equal to 30%
of the Company's outstanding common stock (on a fully diluted basis), has
advised the Company that he will agree that his warrant shall not be applied to
the premium shares issued in the tender offer. In that regard, Mr. Harber has
advised the Company that he intends to exercise his warrant with respect to the
shares outstanding at the closing of the offer, excluding any premium shares.
If less than all of the Notes are tendered, Mr. Harber will at the closing of
the offer receive a new warrant to acquire additional shares equal to 30% (on a
fully-diluted basis) of the shares issuable on the automatic conversion of the
untendered Notes at their maturity. As such, Mr. Harber will only receive from
the full exercise of his warrant the same number of shares that he would have
otherwise received had the Notes automatically converted into Common Stock at
their maturity and had he exercised his warrant immediately thereafter.
Assuming all of the Notes are tendered in the offer, following the closing of
the offer and the exercise of the warrant, Mr. Harber, who currently
beneficially owns approximately 72% of the Company's outstanding common stock,
will beneficially own approximately 44% of the Company's outstanding common
stock.
If the holders of all of the outstanding Senior Notes and Junior Notes agree to
an early conversion of their Notes in accordance with the tender offer, the
Company will have 486,562,978 shares of Common Stock outstanding, including an
aggregate of 41,939,332 premium shares.
At September 30, 2004, the Company had a negative net worth of $95.6 million.
Had the Notes been converted into Common Stock at that date, and the warrant
held by Mr. Harber exercised in full, on a pro-forma basis the Company would
have had a positive net worth of $23.7 million. The Company, based on currently
available information, believes that the Notes will convert into Common Stock
at their maturity. The Company believes that cleaning up its capital structure
at this time will also allow the Company to better take advantage of
opportunities that may be available in its marketplace over the next few years
and allow the Company to take steps to create a more efficient market for its
Common Stock.
This press release is not an offer or solicitation for the early conversion of
the Notes into Common Stock, which can only be made on the terms and subject to
the conditions described in the Offering Circular and related documents. At
the time the offer is commenced, the Company will file a Tender Offer Statement
(including an offering circular, a related letter of transmittal and other
offer documents) with the U.S. Securities and Exchange Commission ("SEC"). The
Tender Offer Statement will be made available to all Noteholders at no expense
to them. The Tender Offer Statement will also be available at no charge at the
SEC's website at http://www.sec.gov/ . The Tender Offer Statement will contain
important information that should be read carefully before any decision is made
with respect to the offer.
TIMCO Aviation Services, Inc. is among the world's largest providers of fully
integrated aviation maintenance, repair and overhaul (MR&O) services for major
commercial airlines, regional air carriers, aircraft leasing companies,
government and military units and air cargo carriers. The Company currently
operates four MR&O businesses: TIMCO, which, with its four active locations
(Greensboro, NC, Macon, GA, Lake City, FL and Goodyear, AZ), is one of the
largest independent providers of heavy aircraft maintenance services in the
world; Aircraft Interior Design and Brice Manufacturing, which specialize in
the refurbishment of aircraft interior components and the manufacture and sale
of aftermarket parts and new aircraft seats; TIMCO Engineered Systems, which
provides engineering services both to our other MR&O operations and to our
customers; and TIMCO Engine Center, which refurbishes JT8D engines and performs
on-wing repairs for both JT8D and CFM-56 series engines. Visit TIMCO online at
http://www.timco.aero/ .
This press release contains forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties, which may cause
the Company's actual results in future periods to differ materially from
forecasted results. A number of factors, including satisfaction of the
conditions to completion of the tender offer contained in the Tender Offer
Statement and those identified in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003 and its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004, could adversely affect the Company's ability
to obtain these results. Copies of the Company's filings with the U.S.
Securities and Exchange Commission are available from the SEC or may be
obtained upon request from the Company. The Company does not undertake any
obligation to update the information contained herein, which speaks only as of
this date.
DATASOURCE: TIMCO Aviation Services, Inc.
CONTACT: Roy T. Rimmer, Jr., Chairman & Chief Executive Officer, or Fritz
Baumgartner, Vice President and Corporate Controller, or Kevin Carter, Vice
President-Planning and Treasurer, all of TIMCO Aviation Services, Inc.,
+1-336-668-4410
Web site: http://www.timco.aero/