AAR prices add-on offering of $150 million of senior notes due 2029

Rhea-AI Summary

AAR Corp (NYSE:AIR), a leading aviation services provider, has successfully priced an add-on offering of $150 million in senior notes due 2029 at a price of 102.000% of their principal amount. The notes carry a 6.750% interest rate with a yield to maturity of 6.119%.

These Additional Notes will be issued under the existing indenture from March 1, 2024, which previously covered $550 million in senior notes. The company plans to use the proceeds to repay outstanding borrowings under its unsecured revolving credit facility and cover offering-related expenses. The offering is expected to close on August 14, 2025.

Positive

• Additional $150 million financing secured through senior notes offering
• Favorable yield to maturity of 6.119%, lower than the notes' coupon rate of 6.750%
• Strategic debt refinancing to address revolving credit facility obligations

Negative

• Increased debt load with additional $150 million in senior notes
• Premium pricing at 102.000% of principal amount increases effective borrowing cost

Insights

Corporate Finance Specialist

AAR's $150M note offering strengthens liquidity while extending debt maturity at favorable 6.12% yield, indicating strong market confidence.

AAR Corp has successfully priced an additional $150 million offering of senior notes due 2029 with a 6.750% coupon rate. The notes were priced at 102.000% of their principal amount, resulting in a more favorable yield to maturity of 6.119%. This pricing above par demonstrates solid market confidence in AAR's debt.

This add-on offering supplements AAR's existing $550 million in notes issued in March 2024 under the same terms, bringing their total 2029 notes to $700 million. The premium pricing obtained (102% of face value) reflects both prevailing interest rate conditions and the market's positive assessment of AAR's credit quality.

The company plans to use proceeds to repay outstanding borrowings under its unsecured revolving credit facility. This refinancing strategy effectively converts short-term revolving debt into longer-term fixed-rate debt, which improves AAR's debt maturity profile and provides enhanced financial flexibility. By utilizing the revolver paydown approach, AAR maintains overall leverage while extending maturities and preserving liquidity for future operational or strategic initiatives.

The transaction is being conducted as a private placement to qualified institutional buyers and non-U.S. persons under Rule 144A and Regulation S exemptions, which typically allows for faster execution compared to registered public offerings while still accessing sophisticated institutional capital.

WOOD DALE, Ill., Aug. 11, 2025 /PRNewswire/ -- AAR CORP. ("AAR" or the "Company") (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, announced today that it has successfully priced its offering of $150 million aggregate principal amount of 6.750% senior notes due 2029 (the "Additional Notes"). The Additional Notes are being issued at a price of 102.000% of their principal amount, plus accrued interest from March 15, 2025, for a yield to maturity of 6.119%.

The Additional Notes are being offered as additional notes under an existing indenture, dated March 1, 2024, pursuant to which the Company previously issued $550.0 million aggregate principal amount of 6.750% senior notes due 2029 (the "Existing Notes" and together with the Additional Notes, the "Notes"). Other than with respect to the date of issuance and the offering price, the Additional Notes will have the same terms as the Existing Notes. The offering is expected to close on August 14, 2025, subject to customary closing conditions.

The Company intends to use the net proceeds of the senior notes offering to repay outstanding borrowings under its unsecured revolving credit facility and to pay fees and expenses incurred in connection with the offering.

The Notes and the related guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), any state securities laws or the securities laws of any other jurisdiction. The Notes and the related guarantees may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration or pursuant to an exemption from, or in a transaction not subject to, registration. The Notes and related guarantees will be offered and sold only to persons reasonably believed to be "qualified institutional buyers" in accordance with Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

This press release is neither an offer to sell, nor the solicitation of an offer to buy, the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.

About AAR
AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the Chicago area, AAR supports commercial and government customers through four operating segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services. Additional information can be found at aarcorp.com.

Forward-looking statements This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, which reflect management's expectations about future conditions, including, but not limited to, intentions regarding the consummation of the proposed senior notes offering and the intended use of proceeds thereof. Forward-looking statements often address our expected future operating and financial performance and financial condition, or targets, goals, commitments, and other business plans, and often may also be identified because they contain words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "might," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or similar expressions and the negatives of those terms. These forward-looking statements are based on the beliefs of Company management, as well as assumptions and estimates based on information available to the Company as of the dates such assumptions and estimates are made, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors, including: (i) factors that adversely affect the commercial aviation industry; (ii) adverse events and negative publicity in the aviation industry; (iii) a reduction in sales to the U.S. government and its contractors; (iv) cost overruns and losses on fixed-price contracts; (v) nonperformance by subcontractors or suppliers; (vi) our ability to manage our operational footprint; (vii) a reduction in outsourcing of maintenance activity by airlines; (viii) a shortage of skilled personnel or work stoppages; (ix) competition from other companies; (x) financial, operational and legal risks arising as a result of operating internationally; (xi) inability to integrate acquisitions effectively and execute operational and financial plans related to the acquisitions; (xii) failure to realize the anticipated benefits of acquisitions; (xiii) circumstances associated with divestitures; (xiv) inability to recover costs due to fluctuations in market values for aviation products and equipment; (xv) cyber or other security threats or disruptions; (xvi) a need to make significant capital expenditures to keep pace with technological developments in our industry; (xvii) restrictions on use of intellectual property and tooling important to our business; (xviii) inability to fully execute our stock repurchase program and return capital to stockholders; (xix) limitations on our ability to access the debt and equity capital markets or to draw down funds under loan agreements; (xx) our ability to manage our debt; (xxi) non-compliance with restrictive and financial covenants contained in our debt and loan agreements; (xxii) changes in or non-compliance with laws and regulations related to federal contractors, the aviation industry, international operations, safety, and environmental matters, and the costs of complying with such laws and regulations; and (xxiii) exposure to product liability and property claims that may be in excess of our liability insurance coverage. Should one or more of those risks or uncertainties materialize adversely, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described. For a discussion of these and other risks and uncertainties, refer to our Annual Report on Form 10-K, Part I, "Item 1A, Risk Factors" and our other filings filed from time to time with the U.S Securities and Exchange Commission. These events and uncertainties are difficult or impossible to predict accurately and many are beyond the Company's control. The risks described in these reports are not the only risks we face, as additional risks and uncertainties are not currently known or foreseeable or impossible to predict accurately or risks that are beyond the Company's control or deemed immaterial may materially adversely affect our business, financial condition or results of operations in future periods. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

Contact:
Investor Relations
+1-630-227-5830
investors@aarcorp.com 

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SOURCE AAR CORP.

FAQ

What is the size and purpose of AAR Corp's (AIR) new notes offering in August 2025?

AAR Corp is offering $150 million in senior notes due 2029 to repay outstanding borrowings under its unsecured revolving credit facility and cover offering-related expenses.

What are the key terms of AAR's (AIR) August 2025 additional notes?

The notes carry a 6.750% interest rate, are priced at 102.000% of principal amount, with a yield to maturity of 6.119%, and will mature in 2029.

How much total senior notes will AAR Corp (AIR) have outstanding after this offering?

After this offering, AAR Corp will have $700 million in total senior notes outstanding, combining the new $150 million additional notes with the existing $550 million notes from March 2024.

When will AAR Corp's (AIR) additional notes offering close?

The offering is expected to close on August 14, 2025, subject to customary closing conditions.