Air Transport Services Group, Inc. Announces Proposed Convertible Senior Notes Offering

Air Transport Services Group, Inc. (NASDAQ: ATSG) today announced its intention to offer, subject to market and other conditions, $350,000,000 aggregate principal amount of convertible senior notes due 2029 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). ATSG also expects to grant the initial purchasers of the notes a 30-day option to purchase up to an additional $50,000,000 principal amount of notes.

The notes will be senior, unsecured obligations of ATSG, will accrue interest payable semi-annually in arrears and will mature on August 15, 2029, unless earlier repurchased, redeemed or converted. Noteholders will have the right to convert their notes in certain circumstances and during specified periods. ATSG will settle conversions in cash and, if applicable, shares of its common stock.

The notes will be redeemable, in whole or in part (subject to certain limitations), for cash at ATSG’s option at any time, and from time to time, on or after August 15, 2026 and on or before the 50th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of ATSG’s common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If certain corporate events that constitute a “fundamental change” occur, then noteholders may require ATSG to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.

ATSG expects to use a portion of the net proceeds from the offering to repurchase shares of its common stock concurrently with the pricing of the offering in privately negotiated transactions effected through one of the initial purchasers of the notes or its affiliate, as ATSG’s agent, and to repurchase shares of its common stock from Amazon.com, Inc. under an existing agreement. ATSG expects to use a portion of the net proceeds from the offering to repurchase approximately $200 million aggregate principal amount of its outstanding 1.125% Convertible Senior Notes due 2024 (the “2024 Notes”) concurrently with the pricing of the offering in privately negotiated transactions effected through one of the initial purchasers of the notes or its affiliate, as ATSG’s agent. ATSG intends to use the remainder of the net proceeds from the offering to satisfy fees and expenses associated with the offering, to repay a portion of the outstanding borrowings under its revolving credit facility and for general corporate purposes. Holders of the 2024 Notes that are repurchased in the concurrent repurchases described above may purchase shares of ATSG’s common stock in the open market to unwind any hedge positions they may have with respect to the 2024 Notes. These activities may affect the trading price of ATSG common stock and, if conducted concurrently with this offering, may result in a higher initial conversion price for the notes ATSG is offering. The concurrent repurchases of shares of ATSG’s common stock described above may result in the common stock trading at prices that are higher than would be the case in the absence of these repurchases, which may result in a higher initial conversion price for the notes. The repurchase of common stock in connection with the offering will not reduce availability under ATSG’s stock repurchase program authorized on November 29, 2022.