Great Lakes Aviation enters into new forbearance agreement amendment

By Tali Rackner

Norfolk, Va., June 4 - Great Lakes Aviation, Ltd. entered into the fourth amendment and second forbearance to its credit agreement with lenders Crystal Financial LLC and GB Merchant Partners, LLC, according to an 8-K filing with the Securities and Exchange Commission.

As of May 30, the company was in breach or expected to be in breach of three financial covenants under its credit agreement dated Nov. 16, 2011. Under the forbearance agreement, the lenders agreed to temporarily forbear from exercising certain rights and remedies under the credit agreement.

The company has agreed, until the forbearance termination date, to pay the lenders an additional 2% per annum above the rates of interest otherwise applicable under the credit agreement.

The termination date is on the earliest of Sept. 15 and the date on which Great Lakes commits additional breaches under the credit agreement.

Great Lakes Aviation also agreed to continue to retain consultant Huron to produce a financial report for the lenders, to provide cash flow projections to the lenders and to reimburse the lenders' costs incurred in connection with the forbearance agreement. It will hire three firms to market its excess aircraft and inventory and hire a financial advisor to help with raising capital through additional equity financings, debt financings or other liquidity events, which may result in a sale of the company.

Great Lakes also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000 and a commitment fee of $60,000.

In consideration of entering into the forbearance agreement, the lenders agreed to lend the company an additional $3 million and defer an additional $2 million of amortization payments, which were due and payable by Sept. 30.

Great Lakes Aviation is a Cheyenne, Wyo.-based regional airline company.

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