FINANCING ARRANGEMENTS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| FINANCING ARRANGEMENTS |
NOTE J – FINANCING ARRANGEMENTS
Outstanding debt obligations as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):
Total deferred financing costs were $1.3 million as of March 31, 2025 and December 31, 2024. Amortized debt issuance costs are recorded in interest expense through maturity of the related debt using the straight-line method, which approximates the effective interest method. Amortization expense amounted to $0.1 million for the three months ended March 31, 2025 and 2024. $180.0 million Wells Fargo Senior Secured Revolving Credit Agreement
On July 20, 2018, AerSale, Inc. and other subsidiary borrowers thereto entered in a secured amended and restated revolving credit agreement (as amended, the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a $180.0 million aggregate amount of revolver commitments subject to borrowing base limitations and is expandable to $200.0 million, subject to borrowing base limitations. The Revolving Credit Agreement matures on July 24, 2028.
The interest rate applicable to loans outstanding on the Revolving Credit Agreement is a floating rate of interest per annum of Secured Overnight Financing Rate (“”) plus a margin of 2.5%. The interest rate as of March 31, 2025 was 7.24%. Interest expense on the Revolving Credit Agreement was $1.0 million for the three months ended March 31, 2025.
The Company’s ability to borrow on the Revolving Credit Agreement is subject to ongoing compliance by the Company and the borrowers with various customary affirmative and negative covenants. The Revolving Credit Agreement requires the Company and borrowers to meet certain financial and nonfinancial covenants. The Company was in compliance with these covenants as of March 31, 2025 and December 31, 2024.
$10.0 million CIBC Property and Equipment Revolving Term Loan On November 22, 2024, the Company entered into a property and equipment revolving term loan (the “CIBC Equipment Loan”) with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of plus 3.0% and have a maturity date of thirty-six () months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required. As of December 31, 2024, borrowings under this facility were converted to a term loan maturing on December 23, 2027. During the three months ended March 31, 2025, the Company borrowed an additional $0.2 million under this facility, which has not been converted to a term loan as of March 31, 2025. The CIBC Equipment Loan is subject to ongoing compliance by the Company in the form of various customary affirmative and negative covenants, as well as certain financial covenants. The Company was in compliance with these covenants as of March 31, 2025. The effective rate on this facility as of March 31, 2025 was 7.89%. Maturities of the CIBC Equipment Loan as of March 31, 2025 are as follows (in thousands):
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