BURLINGAME, Calif.,
Aug. 17, 2015 /PRNewswire/ --
AeroCentury Corp. (NYSE MKT: ACY), an independent aircraft leasing
company, today announced that, following a review and negotiation
conducted for AeroCentury by a committee of its four independent
directors, AeroCentury has reached a new management agreement
with its current management company, JetFleet Management Corp.
("JMC") which continues JMC's management services through
August 2025 and provides AeroCentury
with significant enhancements over the prior management agreement
with JMC.
"We studied a number of alternatives for our day-to-day
operations, and we determined that JMC offered the best mix of
market expertise, customer relationship management and total
value," said David P. Wilson,
independent director and former Senior Vice President of General
Electric Capital Aviation Services. "Among the deciding
factors were the comprehensive services offered by JMC, the
eighteen year history of excellent service they have already
provided to us, and the added value of the continuity of the
relationships with our customers, employees and financial
partners."
The terms of the contract with JMC, which was filed today with
the United States Securities and Exchange Commission, provide
AeroCentury with a number of continuing and new benefits
including:
- Comprehensive management services, under which JMC continues to
assume full responsibility for payment for all employee salaries
and benefits, outside technical services, worldwide travel needed
to promote AeroCentury's business, office space, utilities, IT and
communications, furniture and fixtures, and other general
administrative and overhead costs;
- A management fee that, as with the prior agreement, is based on
overall portfolio size, which will continue to protect AeroCentury
against unanticipated administrative, office space, and personnel
cost increases;
- Continuity of services of JMC's highly experienced management
team, which provides a seamless transition through lease terms and
financing renewals;
- An option right granted to AeroCentury for the acquisition of
JMC;
- A new provision whereby JMC has agreed not to manage portfolios
for identified AeroCentury competitors;
- Revised termination clauses that increase AeroCentury's
flexibility;
- Added breakpoints in the management fee rate, based on
portfolio size, which will generate economies of scale as
AeroCentury's portfolio grows; and
- Added provisions that ensure continuing AeroCentury visibility
into JMC's financial status.
"As one of our largest shareholders, we are confident that JMC's
interests are fully aligned with AeroCentury's business needs,"
said Roy E. Hahn, independent
director, investment manager and former tax partner in the leasing
practice at Coopers & Lybrand. "With a 16-year average
tenure for the JMC management team, it brings deep experience in
the aviation marketplace and invaluable connections with both
existing and potential debt and equity partners. Completing
this negotiation to extend our management agreement at this time
provides continuity for all our stakeholders, and provides
assurances to our banking partners that business operations will
remain on track and that management will continue to be stable for
the entire remaining term of the credit facility and when the time
comes for AeroCentury to seek approval to use the accordion
provisions of the credit facility to increase credit line
availability."
AeroCentury is an aircraft operating lessor and finance company
specializing in leasing regional aircraft and engines utilizing
triple net leases. AeroCentury's aircraft and engines are
leased to regional airlines and commercial users worldwide.
This press release contains certain statements that may
include "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including AeroCentury's statements that the
new contract will continue to protect AeroCentury against
unanticipated administrative, office space, and personnel cost
increases; will provide a seamless transition through lease terms
and financing renewals; and will generate, through application of
breakpoints in the management fee, economies of scale as
AeroCentury's portfolio grows. All statements, other
than statements of historical fact, included herein are
"forward-looking statements." Although AeroCentury believes
that the expectations reflected in these forward-looking statements
are reasonable, they do involve assumptions, risks and
uncertainties, and these expectations may prove to be
incorrect. Actual results could differ materially from
those anticipated in these forward-looking statements as a result
of a variety of factors, including unanticipated operating expenses
to AeroCentury that are not covered by the contract; unanticipated
changes in JMC personnel due to incapacity, illness, or voluntary
departure; lack of availability of appropriate aircraft for
acquisition and financing therefor or operating expense increases
with portfolio size that preclude realization of economies of
scale, as well as those discussed in the AeroCentury's reports that
are filed with the Securities and Exchange
Commission. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Other than as required by law,
AeroCentury does not assume a duty to update any forward-looking
statement.
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SOURCE AeroCentury Corp.