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Finance for Young International Airline

Monday, December 18, 2017
Borrower   The chairman of an international airline.
Loan   A two-year $2.2 million loan at 15%.
Collateral   The 70% ownership in the Airline, his $3.5 million unsecured note from the line, a first mortgages on real estate developments in Bel-Air, Maryland, assignment of a note secured on a 47-acre residential parcel and a marina on the Potomac estuary, a subordinate mortgages on a 438-unit twin apartment tower in Cherry Hill, New Jersey, and an assignment of an $870,000 performing second mortgage (behind a $25 million first mortgage) on a 506 unit condominium with 23 commercial units, 1,179 parking spaces and a 138 slip marina on Treasure Island in Biscayne Bay, Florida.
Guarantors   The loan is guaranteed by the borrower's wife.
Purpose   The loan was for working capital needed by the airline. The chairman had, at that time, exhausted his credit lines, and needed the cash to pay the bills until further finance could be arranged.
Exit strategy   The borrower planned to put the airline's finances on a more secure footing once the line became profitable. We were to be repaid out of the proceeds of a debt or equity offering.
Outcome   The secured note was sold by the borrower, and $500,000 of the loan was paid down. The airline filed for bankruptcy (and never emerged), but the borrower repaid the loan in full.





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