Aviation Sales says lenders back restructuring, sees completion in early 2002

New York, Nov. 30 - Aviation Sales Co. said it plans to complete the previously announced restructuring of its senior subordinated notes early in the first quarter of 2002. The Greensboro, N.C. aviation maintenance, repair and overhaul company also said its bank lenders have recently approved the plan.

Under the plan, holders of Aviation Sales' $165 million of 8 1/8% senior subordinated notes due Feb. 15, 2008 will exchange those notes for $10 million in cash, $100 million par value of new five-year notes with pay-in-kind interest of 8% and 15% of the equity in the reorganized company.

The new notes will be redeemable at 70% of par in 2002, 72.5% in 2003, 73.0% in 2004, 75.625% in 2005 and 77.5% in 2006. If the notes are not redeemed before maturity they will convert into common stock representing 90% of the company. Should the notes be redeemed in 2002 or 2003, holders will also receive stock for 15% of the company or 10% if the notes are redeemed in 2004, 2005 or 2006.

Holders of 73.02% of the outstanding notes agreed in August to support the plan, the company said. These holders also agreed to waive the default arising because Aviation Sales did not pay interest due on Aug. 15, 2001.

Aviation Sales also plans a $20 million rights offering of common stock to its existing shareholders. These new shares will represent 80% of the stock of the reorganized company. Currently outstanding stock will represent 5% of the company. The company's principal stockholder, Lacy J. Harber, has agreed to buy unsold allotments in the rights offering.

Both new noteholders and existing stockholders will receive warrants to buy 10% of the reorganized company.

To achieve the note restructuring and rights offering, Aviation Sales must receive approval of a majority of the company's stockholders and 80% of holders of the existing notes must tender their securities and consent to remove all covenants except the obligation to pay principal and interest. Approval of senior lenders has now been obtained and the lenders have agreed to forbear on the default on the senior loan agreements resulting from failure to make the Aug. 15, 2001 note interest payment until March 31, 2002 as long as the registration statements for the note exchange and rights offering become effective by Feb. 15, 2002.

Aviation Sales warned that if it does not complete the note exchange and rights offering it may have to seek bankruptcy protection.

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