Evergreen disputes Wells Fargo claim of defaults under credit facility

By Sara Rosenberg

New York, June 7 - Evergreen International Aviation Inc., a wholly owned subsidiary of Evergreen Holdings Inc., is in negotiations with lead bank Wells Fargo because Evergreen is disputing the bank's claim that it defaulted on certain covenants contained in its $100 million three-year senior secured credit facility, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

On June 1, Wells Fargo told the company that the following defaults were committed: a default on a secured loan agreement with Finova Capital Corp. at final maturity on April 29; failure to maintain insurance on the collateral; the making of an unpermitted investment toward the purchase of two Boeing 747 airplanes; and the unauthorized use of borrowings under the credit facility to renovate the two Boeing 747 airplanes.

Because of these defaults, Wells Fargo has bumped up the interest rate on the credit facility by 200 basis points, effective April 29.

"Based upon the facts and circumstances, the borrowers do not believe that the specified events of default constitute actual events of default, as defined under the secured credit facility. The borrowers are currently in active discussions with the Wells Fargo lenders to resolve the matter," the filing added.

Evergreen is a McMinnville, Ore.-based aviation services company.

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