Webster Bank (formerly Sterling National Bank) agreed to expand the size of Air Industries Group’s existing term loan and establish a capital expenditure line of credit to finance future purchases of machinery and equipment. The transaction closed on May 17.
The new term loan has an initial principal amount of $5 million. Air Industries Group will use the funds to retire its existing term loan of approximately $3.1 million, retire a capital lease of approximately $250,000 and purchase two CNC milling centers for an aggregate price of $870,000. In addition to the term loan, Webster Bank extended a new $2 million capital expenditure line of credit to be used to purchase new machinery and equipment.
All advances under the term loan and the capital expenditure line of credit are amortizable over seven years (84 months), mature on Dec. 31, 2026, and bear interest at the greater of 3.5% per annum, 30-day LIBOR plus 250 basis points or Prime Rate less 65 basis points. The current interest rate is 3.5%.
“Webster Bank became Air Industries’ primary lender in January 2020. Their support over the past two and one-half years has been a great benefit to us,” Lou Melluzzo, CEO of Air Industries Group, said. “We have previously announced significant capital investments to expand the capabilities and improve the efficiency of our operations. This expands our term loan and capital expenditure line of credit by nearly $4 million and will enable us to complete the purchase of several major new pieces of equipment, including the CNC machines, costing over $2.2 million, and to continue our modernization program into 2023.
“I would also like to point out that over the past two years, Air Industries has significantly reduced its prior term loan through principal payments. In December 2020, our term loan had a principal balance of over $5.6 million and this has been reduced by $2.5 million. This transaction essentially allows us to reborrow what we had paid back and reinvest those proceeds in the business.”
Air Industries Group is an integrated Tier 1 manufacturer of precision assemblies and components for aerospace and defense applications and a prime contractor to the U.S. Department of Defense.
