Form 8-K Air Transportation Services for: October 19

Item 1.01.

Conclusion of a significant definitive agreement

First Amendment to Third Amended and Restated Credit Agreement and Other Credit Documents

On October 19, 2022, Air Transport Services Group, Inc. (the “Company”), Cargo Aircraft Management, Inc. (the “Borrower”) and certain of the Company’s other subsidiaries entered into the First Amendment to the Amended Third Credit and updated Agreement and Other Credit Documents (the “First Amendment”) by and between the Company, the Borrower, certain subsidiaries of the Company party thereto as subsidiary guarantors (collectively, the “subsidiary guarantors”), the financial institutions parties as lenders (collectively, the “Lenders”) and Truist Bank, as administrative agent for the Lenders (in this capacity, the “Administrative Agent”). The First Amendment amends (i) certain Third Amended and Restated Credit Agreements, dated April 6, 2021 (the “Existing Credit Agreement” and, as amended by the First Amendment, the “Credit Agreement”), by and among the Company, the Borrower, the Lenders and the Administrative Agent and (ii) that certain Second Amended and Restated Guarantee and Security Agreements, dated November 9, 2018, by and between the Company, the Borrower, the Guarantors Subsidiaries parties thereto and the Administrative Agent (the “Existing Guarantee and Security Agreement”).

The First Amendment amends the Existing Credit Agreement and the Existing Guarantee and Guarantee Agreement by, among other things, (i) increasing the aggregate principal amount of commitments under the Revolving Facility (the “Revolving Facility”) by $200.0 million to $1.0 billion; (ii) reduce the commitment fee applicable to the Revolving Facility by 0.05%, as applicable, based on the Company’s secured leverage ratio, (iii) replace LIBOR with SOFR as the interest rate benchmark and allow the Borrower to select an index rate for each borrowing from several interest rate options, including one- or three-month adjusted forward SOFR, (iv) extension of the maturity date of the revolving credit facility to October 19, 2027, (v) the reduction of the outstanding loan collateralization ratio to 1.15:1.00 from 1.25:1:00, (vi) excluding each of the Irish subsidiaries of the Company and each of their subsidiaries and certain other subsidiaries of the Company of the obligation to enter into the Revolving Facility as a subsidiary guarantor, (vii) to make amendments to certain covenants and events of default of the existing Credit Agreement to enable the Irish Credit Facility (as defined below), (vi (ii) allow cash dividends and share buybacks provided the guaranteed leverage ratio is less than 3.00 to 1.00 and the total leverage ratio is less than 3.50 to 1.00, instead a $100 million annual limit on cash dividends and share buybacks; and (ix) provide for the release of collateral securing the obligations under the Credit Agreement if the Company obtains an investment grade rating from two of the three rating agencies, subject to reversion if two of such rating agencies withdraw the Company’s investment grade rating or downgrade the Company’s rating below investment grade.

Except as provided in the First Amendment, all other terms and conditions of the Existing Credit Agreement and the Existing Guarantee and Guarantee Agreement shall remain in full force and effect.

The foregoing description of the First Amendment and the Revolving Facility is qualified in its entirety by reference to the text of the First Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference. The existing credit agreement is described in point 1.01 of the current report on form 8-K filed by the Company on April 6, 2021, and was filed as Exhibit 10.1 thereto. The existing guarantee and guarantee agreement is described in section 1.01 of the annual report on form 10-K filed by the Company on March 1, 2019, and was filed as Exhibit 10.63.

Irish credit facility

After giving effect to the First Amendment, it is intended that the Company’s Irish subsidiary, Airborne Global Leasing Limited (the “Irish Subsidiary”), will enter into, and the Company and certain of the Company’s other subsidiaries (excluding Irish Subsidiary) Secured, a $100 million secured revolving credit facility governed by Irish law (the “Irish Credit Facility”) between the Irish Subsidiary, the Company, certain Company Subsidiaries (excluding the Irish subsidiary), the other financial institutions to be a party thereto and Truist Bank (in such capacity, the “Administrative Agent of the Irish Credit Facility”). The Irish credit facility is expected to be secured by first ranking security interests in certain qualifying aircraft owned by the Irish subsidiary and will be subject to terms acceptable to the administrative agent of the Irish credit facility.

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