UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
February 18, 2002
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
COMMISSION FILE NUMBER 1-11775
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TIMCO Aviation Services, Inc.
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(Exact Name Of Registrant As Specified In Its Charter)
Delaware 65-0665658
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(State Or Other Jurisdiction Of (IRS Employer
Incorporation Or Organization) Identification No.)
623 Radar Road
Greensboro, N.C. 27410
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(Address Of Principal Executive Offices)
(336) 668-4410 x 3004
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(Registrant's Telephone Number,
Including Area Code)
Aviation Sales Company
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(Former Name Or Former Address,
If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
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Completion of Restructuring
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On February 28, 2002, the Company completed its previously announced
restructuring. On that date, the Company effected a one-share-for-ten-shares
reverse split of its outstanding common stock. Its corporate name also changed
from "Aviation Sales Company" to "TIMCO Aviation Services, Inc." and the trading
symbol for its common stock on the Bulletin Board maintained by the NASD changed
from "AVIO" to "TMAS." The Company also closed its note exchange offer and
rights offering.
In the note exchange offer portion of the restructuring, the Company
exchanged $148,753,000 of its old 8 1/8% senior subordinated notes due 2008 for
$5.1 million in cash, $100 million of its new 8% senior subordinated convertible
PIK notes, 4.5 million shares of its post-reverse split common stock, and five
year warrants to purchase 3.0 million shares of its post-reverse split common
stock at an exercise price of $5.16 per share. In the rights offering portion of
the restructuring, the Company sold 24.0 million shares of its post-reverse
split common stock, raising gross proceeds of $20 million.
Further, as part of the restructuring, the Company distributed five year
warrants to purchase 3.0 million shares of its post-reverse split common stock
at an exercise price of $5.16 per share to its stockholders of record at the
close of business on February 27, 2002.
The net proceeds of the rights offering, approximating $10.0 million after
payment of the cash proceeds of the note exchange offer and expenses of the
restructuring, will be used by the Company for working capital. After completion
of the restructuring, the Company has 30.0 million shares of its post-reverse
split common stock outstanding and Lacy J. Harber, the Company's principal
stockholder, owns approximately 61% of the Company's outstanding common stock.
Additionally, in connection with the restructuring the Board of Directors has
terminated the Company's Stockholders' Rights Plan.
A copy of the Company's press release announcing the completion of the
restructuring is attached hereto as Exhibit 99.1.
Post Closing Resolution Agreement with Kellstrom Industries, Inc.
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On February 18, 2002, the Company entered into a Post-Closing Resolution
Agreement (the "Agreement") with Kellstrom Industries, Inc. ("Kellstrom"). The
Agreement is intended to resolve and settle globally outstanding disputes
between the Company and Kellstrom (the "Settlement") relating to matters arising
out of the Company's December 2000 sale of substantially all of the assets of
its redistribution operation to Kellstrom and to KAV Inventory, LLC ("KAV"), a
limited liability company owned 50% by the Company and 50% by Kellstrom.
The Agreement provides that:
a. Kellstrom will purchase certain furniture, fixtures and equipment
("FF&E") from Aviation Sales Distribution Services Company
("ASDC"), a subsidiary of the Company, which equipment is
currently being used by Kellstrom in the operation of its
business;
b. Kellstrom will "put" certain uncollected accounts receivable
which were sold by ASDC to Kellstrom as part of the sale of the
assets of the redistribution operation to the Company in
accordance with the terms of the Asset Purchase Agreement, dated
December 1, 2000, among Kellstrom, the Company and ASDC (the
"APA");
c. Kellstrom and the Company will resolve outstanding purchase price
adjustment disputes under the APA and under the Inventory
Purchase Agreement, dated December 1, 2000, among the Company,
ASDC and KAV;
d. The Company and Kellstrom will settle and setoff amounts due and
owing in the ordinary course between Kellstrom and the Company,
including certain rental amounts owed by Kellstrom under the
Miramar Lease (defined below);
e. Kellstrom's sub-lease (the "Miramar Lease") of the Company's
545,000 square foot Miramar, Florida warehouse and office
facility (the "Miramar Facility") will be amended to provide for
a term of twenty (20) years with an annual minimum rental of
$2,750,000 for the first five years, $3,000,000 for years six
through ten and a fair market value thereafter (all subject to
CPI increases). Further, the amended Miramar Lease will provide
Kellstrom with a one-time right to terminate the Miramar Lease
upon the completion of the 7th lease year after the closing of
the settlement;
f. The Non-Competition Agreement between the Company and Kellstrom
will be amended to, among other things, allow the Company's
Aerocell Structures flight surfaces MR&O operation to exchange
flight surfaces with its customers and to allow the Company,
during the six months following the completion of the settlement
to sell up to $4.0 million of aircraft parts;
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g. The Cooperation Agreement between Kellstrom and the Company,
which obligates the Company to purchase aircraft parts from
Kellstrom, will be terminated; and
h. The Company will support a new consignment agreement for the
consignment of the KAV inventory to Kellstrom on certain amended
terms.
The Settlement, if completed, is expected to result in a net payment to the
Company of approximately $300,000 in cash.
Closing of the Settlement is subject to various closing conditions. In
particular, the settlement is subject to approval of the bankruptcy court in
Kellstrom's Chapter 11 bankruptcy proceeding in the United States Bankruptcy
Court for the District of Delaware (Case no. 02-10536). On February 20, 2002,
Kellstrom filed its bankruptcy petition and announced that it had executed an
agreement, subject to Bankruptcy Court approval, to sell its business to an
entity controlled by Inverness Management LLC. The Company believes that the
sale of the FF&E to Kellstrom and the execution of the Miramar lease amendment
between the Company and Kellstrom are required as part of Kellstrom's proposed
sale of its business.
The closing of the Settlement is also subject to, among other conditions,
the approval of the Company's senior revolving credit lenders and TROL facility
lender and to a satisfactory long-term restructuring of the Company's TROL
facility.
The foregoing is a summary of the information contained in the agreement
relating to the Settlement. Reference is made to the more detailed information
contained therein and attached hereto as Exhibits 10.1 to 10.4.
Settlement between Kellstrom and certain lenders affiliated with the
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Company
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In December 2000, at the time of the Company's sale of its redistribution
operation to Kellstrom, four investors posted $8.0 million in letters of credit
with Kellstrom's lenders to support Kellstrom's senior revolving credit
facility. One of those investors is an entity controlled by Lacy Harber, the
Company's principal stockholder. A second is an entity controlled by Robert
Alpert, a former director and principal stockholder of the Company. The letters
of credit were drawn by Kellstrom's senior lenders in October 2001 and the four
investors are now creditors of Kellstrom in its bankruptcy proceeding.
As part of the Agreement, Kellstrom has agreed to grant the four
investors an option to purchase a facility owned by Kellstrom located in
Sunrise, Florida for a period of one year following the closing of the
Settlement for a net amount of $5.5 million, which includes a credit for the
$8.0 million of letters of credit which were previously drawn by Kellstrom's
lenders. Completion of this transaction is one of the conditions to the closing
of the Settlement with Kellstrom.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
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10.1 Post-Closing Resolution Agreement among the Company, ASDC and
Kellstrom, dated as of February 18, 2002
10.2 Form of First Amendment to Lease regarding the Miramar Facility
10.3 Form of Amendment to Non-Competition Agreement
10.4 Term Sheet for Amended Consignment Agreement
99.1 Press Release announcing closing of restructuring, dated
February 28, 2002
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 5/th/ day of March, 2002.
TIMCO AVIATION SERVICES, INC.
/s/ C. Robert Campbell
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C. Robert Campbell
Executive Vice President and CFO
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EXHIBIT INDEX
Exhibit No. Description
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10.1 Post-Closing Resolution Agreement among Kellstrom, the Company
and ASDC, dated as of February 18, 2002
10.2 Form of First Amendment to Lease regarding the Miramar
Facility
10.3 Form of Amendment to Non-Competition Agreement
10.4 Term Sheet for Amended Consignment Agreement
99.1 Press Release announcing closing of restructuring, dated
February 28, 2002