Kellstrom discussing exchanging convertibles, mezzanine debt for equity

New York, Oct. 10 - Kellstrom Industries, Inc. said it is discussing with investors an exchange of its convertible notes and mezzanine debt for equity.

The Miramar, Fla. company said some holders of its $54 million of 5¾% convertible subordinated notes due Oct. 15, 2002 and its $86.25 million of 5½% convertible subordinated notes due June 5, 2003 have formed a steering committee. They have also retained Jefferies & Co. as financial advisor and Bingham Dana as legal advisor.

Kellstrom said in a statement: "These ongoing discussions have been constructive and have focused on the potential conversion of the outstanding notes into equity."

The company added that it encourage noteholders who have not yet participated in the discussions to contact Jefferies or Bingham Dana.

Kellstrom also said that Key Principal Partners, its mezzanine lender, has hired P.J. Solomon as its financial advisor, to work with Kellstrom on restructuring. Kellstrom said Key has expressed a willingness to discuss the conversion of its $30 million 13% subordinate note due Nov. 2007 into equity.

In addition, Kellstrom said it is working with its senior lenders and their agent, Bank of America, to formulate an operating plan that incorporates the impact of the Sept. 11 terrorist attacks on the commercial aviation industry.

Kellstrom, an aviation inventory management company, received 75% of its 2000 revenues from commercial aviation.

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