UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 9, 2005
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AIR METHODS CORPORATION
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(Exact name of Registrant as Specified in Its Charter)
Commission file number 0-16079
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Delaware 84-0915893
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
7301 South Peoria, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (303) 792-7400
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Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report: N/A
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.02. TERMINATION OF MATERIAL DEFINITIVE AGREEMENT
On May 9, 2005, Air Methods Corporation (the "Company") prepaid $23,000,000 of
outstanding subordinated indebtedness with Prudential Capital Partners, L.P. and
Prudential Capital Partners Management Fund, L.P. The funds used to prepay the
subordinated indebtedness were obtained from an amended and restated senior
credit facility (see further description below). In conjunction with the
prepayment of the subordinated indebtedness, the Company was required to pay a
6% prepayment penalty.
See also Item 2.03 for a description of the amended and restated credit facility
and a related security agreement.
ITEM 2.03. CREATION OF DIRECT FINANCIAL OBLIGATION
On May 9, 2005, the Company amended and restated its senior revolving credit
facility (the "Amended Credit Facility") with PNC Bank, National Association
("PNC") to provide for, among other things, up to $35 million of revolving
advances (the "Revolver"), $12 million under one term loan ("Term Loan A") and
$8 million under another term loan ("Term Loan B"). A copy of the Amended and
Restated Credit Facility and Amended and Restated Security Agreement are filed
as Exhibits 10.1 and 10.2, respectively, to this Form 8-K and incorporated by
reference. The proceeds from Term Loans A and B, along with additional
borrowings under the Revolver, were used to prepay $23 million (plus accrued
interest and the prepayment penalty mentioned above) of outstanding subordinated
indebtedness on May 9, 2005.
Borrowings under the Amended Credit Facility are secured by 13 aircraft and
substantially all of the Company's accounts receivable, inventory, equipment and
general intangibles. The maturity date of Amended Credit Facility is March 31,
2010. The Amended Credit Facility can be prepaid prior to maturity, subject to a
prepayment fee which ranges from .25% to 1.00%. The Company and each of its
three subsidiaries are each direct obligors on the Amended Credit Facility.
Borrowings under the Revolver and Term Loan A bear interest, at the Company's
option, at either (i) the higher of the federal funds rate plus 0.50% or the
prime rate as announced by the lenders plus an applicable margin ranging from
0.50% to 1.50% or (ii) a rate equal to LIBOR (as defined in the Amended Credit
Facility) plus an applicable margin ranging from 1.75% to 3.25%. The applicable
margin in each case is based upon the ratio of Senior Debt (as defined in the
Amended Credit Facility) to EBITDA (as defined in the Amended Credit Facility)
for the four most recently completed fiscal quarters. Borrowings under Term Loan
B bear interest at the Company's option, at either (i) the higher of the federal
funds rate plus 0.50% or the prime rate as announced by the lenders plus 1.50%
or (ii) a rate equal to LIBOR plus 3.75%.
Quarterly principal payments of $500,000 commence on April 1, 2006 for Term Loan
A, with the remaining principal balance due March 31, 2010. Quarterly principal
payments of $1,000,000 commence on April 1, 2006 for Term Loan B.
The maximum amount of borrowings under the Revolver is equal to the lessor of
(i) $35,000,000 or (ii) the sum of (a) 75% of eligible Medicare, Medicaid,
insurance company and community based payors, (b) 85% of all other eligible
receivables, and (c) the least of (A) 60% of eligible inventory, (B) 85% of the
net orderly liquidation value of eligible inventory, or (C) $15,000,000.
Each aircraft securing the Amended Credit Facility has a designated Aircraft
Collateral Value (as defined in the Amended Credit Facility). Each of the
aircraft may be released as Collateral (as defined in the Amended Credit
Facility) provided that the Company provides a replacement aircraft that is
unencumbered and has an appraised value equal to, or greater than, 118% of the
Aircraft Collateral Value of the aircraft being released. To the extent that
118% of appraised value of the replacement aircraft is less than the Aircraft
Collateral Value of the aircraft to be released, the Company will be required to
repay the amount of the difference. The Company may sell or dispose of aircraft
without providing substitute collateral if it repays the amount of the Aircraft
Collateral Value in order to release the aircraft as Collateral. If repayments
are made by the Company in connection with such sale of Collateral, the
repayments will first
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be applied to the outstanding principal installments of Term Loan B in inverse
order of maturities, with any remaining funds applied against the outstanding
principal installments of Term Loan A in inverse order of maturities
Commencing with the fiscal year beginning January 1, 2006, the Company will be
required to make principal prepayments equal to 50% of the amount of Excess Cash
Flow (as defined in the Amended Credit Facility). These prepayments will first
be applied to the outstanding principal installments of Term Loan B in inverse
order of maturities thereof, with any remaining funds applied against the
outstanding principal payments of Term Loan A in inverse order of maturities
thereof.
The Amended Credit Facility contains various covenants that limit, among other
things, the Company's ability to:
- create liens;
- declare dividends;
- make loans and investments;
- enter into real property leases exceeding specified limits;
- make any material change to the nature of the Company's business;
- enter into any transaction with affiliates other than on arms' length
terms;
- prepay indebtedness, except in connection with refinancing Aircraft
Indebtedness (as defined in the Amended Credit Facility);
- enter into a merger or consolidation; or
- sell assets outside of the ordinary course of business.
The Amended Credit Agreement also contains covenants that require the Company to
maintain:
- a minimum Fixed Charge Coverage Ratio (as defined in the Amended
Credit Facility) of not less than 1.20 to 1.00;
- a minimum net worth;
- a Leverage Ratio (as defined in the Amended Credit Facility) of not
more than 4.00 to 1.00 (decreasing after 6/30/05).
The Amended Credit Facility limits the amount of indebtedness that can be
incurred, the net present value of operating leases entered into and unfinanced
capital expenditures to $35 million per year (increasing in 2006).
The Amended Credit Facility limits the amount of acquisitions to $10 million per
year without the prior written consent of the majority of the member banks, and
any debt incurred related to an acquisition must be less than twice the cash
purchase price. Additionally, no acquisition may occur without prior consent of
the majority of the member banks unless there is $10 million of undrawn
availability under the Revolver.
Payment obligations under the Amended Credit Facility accelerate upon the
occurrence of defined events of default, including the following:
- failure to pay principal or interest under the Amended Credit Facility
or any other indebtedness;
- events of insolvency or bankruptcy;
- judgments of $250,000 are not paid or discharged timely;
- failure to maintain the first priority status of liens under the
Amended Credit Facility;
- levy against a material portion of the Company's assets;
- suspension of material governmental permits
- interruption of operations at any Company facility that has a material
adverse effect; and
- a Change of Control (as defined in the Amended Credit Facility).
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The description of the Amended Credit Facility and Amended Security Agreement is
a summary and does not contain all of the exceptions and qualifications that may
apply. Reference is made to the copy of such documents filed as an exhibit to
this Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits are filed as part of this report:
10.1 Amended and Restated Revolving Credit, Term Loan and Security
Agreement, dated as of May 9, 2005, among Air Methods Corporation,
Rocky Mountain Holdings, L.L.C., Mercy Air Service, Inc. and LifeNet,
Inc. and PNC Bank, National Association, Wells Fargo Bank, N.A., and
Keybank, N.A.
10.2 Amended and Restated Security Agreement, dated as of May 9, 2005,
among Air Methods Corporation, Rocky Mountain Holdings, L.L.C., Mercy
Air Service, Inc. and LifeNet, Inc. and PNC Bank, National
Association, as Agent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIR METHODS CORPORATION
Date: May 13, 2005 By \s\ Trent Carman
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On behalf of the Company, and as Chief
Financial Officer
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