Air Industries (AIRI) and Tenax plan highly dilutive merger to build aerospace platform
Rhea-AI Filing Summary
Air Industries Group is entering a transformative all‑stock merger with Tenax Aerospace Acquisition. Air will issue about 94.4 million shares of common stock, adjustable to roughly 112.5 million shares based on a debt-linked share price of about $3.44. After closing, Tenax members are expected to own approximately 95% of Air, with current Air shareholders holding about 5%, subject to stockholder approval of a charter amendment lifting authorized shares from 20 million to 200 million and approving the stock issuance.
The combined company, based on preliminary 2025 results, would have generated about $183.3 million of revenue and Adjusted EBITDA of roughly $65.0 million, with net debt near $380.0 million and expectations for 2026 revenue above $210.0 million and Adjusted EBITDA above $75.0 million. Protections for existing shareholders include a post‑closing tender offer for up to 1,000,000 shares at the debt‑adjusted share price if the pre‑closing trading price is lower, and a one‑year redemption right to sell shares back at 107.3% of that price if the stock underperforms. The deal includes mutual $1.25 million termination fees in certain scenarios and requires antitrust and other regulatory clearances.
Positive
- Strategic scale and earnings uplift: Based on preliminary 2025 results, the combined company would have about $183.3 million of revenue and $65.0 million of Adjusted EBITDA, with management expecting 2026 revenue above $210.0 million and Adjusted EBITDA above $75.0 million, materially increasing Air’s scale.
Negative
- Severe dilution and high leverage: Tenax members are expected to own about 95% of Air after receiving an estimated 112.5 million shares, while the combined business carries roughly $380.0 million of net debt, creating meaningful dilution and balance‑sheet risk for current shareholders.
Insights
Highly dilutive, leveraged stock-for-equity merger that reshapes AIRI’s business and ownership.
The transaction combines Air Industries and Tenax Aerospace via an all‑stock merger where Tenax members receive roughly 94.4 million shares, currently estimated at about 112.5 million using a Debt Adjusted AIR Share Price near $3.44. Post‑deal, Tenax holders would own about 95% of Air, leaving existing shareholders with about 5%, representing a near total change of control.
Strategically, the combination marries precision aerospace manufacturing with special‑mission aviation services. Preliminary 2025 figures show combined revenue around $183.3M and Adjusted EBITDA about $65.0M. Tenax contributes the bulk of earnings, with 2025 Adjusted EBITDA of about $60.4M versus Air’s roughly $4.3M, highlighting a shift toward Tenax’s economics. Management expects 2026 pro forma revenue above $210.0M and Adjusted EBITDA above $75.0M, but these are forward‑looking and subject to execution and integration risks.
Financially, leverage is significant: combined net debt is about $380.0M, including $80.0M from a January 2026 refinancing to buy minority interests at Tenax, with an expectation that net debt at closing could be up to $30.0M lower. The structure includes a charter amendment boosting authorized shares to 200 million and several shareholder protections: a tender offer for up to 1,000,000 shares at the Debt Adjusted AIR Share Price if the pre‑closing 20‑day VWAP is lower, plus a non‑transferable right for pre‑merger shareholders to redeem shares one year after closing at 107.3% of the Debt Adjusted AIR Share Price if the stock trades below that level over the prior 20 trading days.
8-K Event Classification
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Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On February 16, 2026, Air Industries Group, a Nevada corporation (“AIR”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tenax Aerospace Acquisition, LLC, a Delaware limited liability company (“Tenax”), and Transitory Air Sub LLC, a Delaware limited liability company and wholly owned Subsidiary of AIR (“Merger Sub”), pursuant to which Merger Sub will merge with and into Tenax, with Tenax continuing as the surviving company in such merger (the “Merger”) and a wholly owned Subsidiary of AIR. Capitalized terms used herein without definition have the meanings assigned to them in the Merger Agreement.
Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, AIR will issue 94,400,000 shares of AIR Common Stock, subject to certain adjustments described below (the “Merger Consideration”), to the holders of the membership interests of Tenax at the Closing (the “Tenax Members”). A portion of the Merger Consideration allocated in respect of membership interests of Tenax underlying certain Tenax warrants that remain unexercised as of the Closing, if any, will be reserved by AIR for future issuance upon the exercise of such warrants. Following the Closing, the Tenax Members will collectively own approximately 95% of outstanding AIR Common Stock, and the stockholders of AIR as of immediately prior to the Closing will collectively own approximately 5% of outstanding AIR Common Stock. The issuance of the shares of AIR Common Stock constituting the Merger Consideration to the Tenax Members will be made in reliance on an exemption from the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”), set forth in Section 4(a)(2) thereof, relating to sales by an issuer not involving a public offering.
The Merger Consideration will be adjusted based on a calculation of AIR Net Indebtedness to determine the Debt Adjusted AIR Share Price, in each case as of the last day of the calendar month most recently ended more than 15 days prior to the Closing Date. Based on AIR’s preliminary unaudited balance sheet as of December 31, 2025, the calculation of AIR Net Indebtedness would result in a Debt Adjusted AIR Share Price of approximately $3.44 per share of AIR Common Stock, and the Merger Consideration would comprise approximately 112.5 million shares of AIR Common Stock.
Tenax has agreed that at the Closing, Tenax or one of its Affiliates will pay or cause to be paid the indebtedness of AIR due to Webster Bank and Michael and Robert Taglich, directors of AIR, in satisfaction of certain subordinated notes.
The Merger Agreement contains customary representations and warranties of the parties, in each case generally subject to customary materiality and other qualifiers, and customary pre-Closing covenants of the parties, including covenants requiring both AIR and Tenax to use reasonable best efforts to (a) conduct their respective businesses in all material respects in the ordinary course consistent with past practice and refrain from taking certain types of actions without the other party’s consent (not to be unreasonably withheld, delayed or conditioned), subject to certain exceptions, and (b) obtain all required regulatory approvals and clearances and consummate the Transactions, subject to certain exceptions and limitations.
Under the Merger Agreement, each of AIR and Tenax is subject to customary “no-shop” provisions that restrict AIR and Tenax’s ability to solicit competing proposals from third parties, and/or to provide information to third parties and to engage in discussions with third parties, in each case, in connection with competing proposals, subject to certain exceptions. However, under certain circumstances and in compliance with certain obligations set forth in the Merger Agreement, AIR is permitted to provide non-public information and engage in discussions and negotiations with respect to competing proposals that constitute, or are reasonably likely to lead to, a Superior Proposal. Prior to receipt of the AIR Stockholder Approvals, the AIR Board may, in certain limited circumstances, withdraw or modify its recommendation that the AIR Stockholders approve the AIR Charter Amendment (as defined below) or the AIR Stock Issuance (as defined below) or adopt or recommend any Superior Proposal (a “Change in the AIR Recommendation”), subject to complying with notice and other specified conditions, including giving Tenax the opportunity to propose revisions to the terms of the transactions contemplated by the Merger Agreement during a match right period. Notwithstanding a Change in the AIR Recommendation by the Board, unless Tenax terminates the Merger Agreement, AIR is still required to convene the meeting of its stockholders to approve the AIR Charter Amendment and the AIR Stock Issuance.
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The Closing is subject to certain specified conditions, including, among other things: (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act, (b) the receipt of certain antitrust and government agency approvals and clearances and (c) other customary conditions for a transaction of this type, such as the absence of any legal restraint prohibiting the consummation of the Transactions and there not having occurred with respect to AIR or Tenax’s business a material adverse effect, subject to certain customary exceptions. The Closing is not conditioned upon AIR or Tenax’s ability to obtain financing for the Transactions.
In addition, the Closing will be subject to approval by the AIR Stockholders of (a) a proposal to amend AIR’s Articles of Incorporation (the “AIR Charter Amendment”) to (i) increase the number of authorized shares of AIR Common Stock from 20 million to 200 million and (ii) authorize stockholder action by written consent in lieu of a stockholder meeting at any time while Majority Ownership (as defined in the AIR Charter Amendment) exists and (b) a proposal, in compliance with Section 713(b) of the NYSE American Company Guide, to approve the issuance of the shares of AIR Common Stock constituting the Merger Consideration to the Tenax Members, resulting in a change in control of AIR (the “AIR Stock Issuance”).
The Board of Directors of AIR has adopted the Merger Agreement and approved the Transaction Documents and the Transactions, and resolved to recommend that the AIR Stockholders vote in favor of approving the AIR Charter Amendment and the AIR Stock Issuance.
The Merger Agreement contains customary termination rights for the benefit of AIR and Tenax, including (a) if the other party breaches its representations, warranties or covenants under the Merger Agreement to a degree that would cause the failure of the closing conditions (subject to a cure right), (b) if the Closing does not occur on or before September 30, 2026, (c) if a governmental authority has enacted, issued, promulgated, enforced or entered any law, whether temporary, preliminary or permanent, which is then in effect and has the effect of enjoining, restraining, prohibiting or otherwise preventing the consummation of the Transactions, (d) if the AIR Stockholders fail to approve the AIR Charter Amendment or the AIR Stock Issuance or (e) if AIR and Tenax mutually consent to termination in writing.
The Merger Agreement also contains customary termination rights (a) for Tenax, if (i) AIR makes a Change in the AIR Recommendation or (ii) certain stockholders of AIR fail to execute and deliver the AIR Stockholder Support Agreement within 72 hours following execution and delivery of the Merger Agreement and (b) for AIR, (i) if Tenax fails to close the Merger within a specified period after all closing conditions have been satisfied or AIR’s delivery of a written notice to Tenax that all of Tenax’s closing conditions have been satisfied or waived or that AIR is willing to waive any unsatisfied conditions, (ii) to accept a Superior Proposal or (iii) if certain Tenax Members fail to execute and deliver the Tenax Member Support Agreement within 72 hours following execution and delivery of the Merger Agreement.
If the Merger Agreement is terminated under certain other specified circumstances, AIR or Tenax will be required to pay a termination fee. AIR will be required to pay Tenax a termination fee of $1,250,000 if AIR terminates the Merger Agreement to accept a Superior Proposal or Tenax terminates the Merger Agreement because the AIR Board has made a Change in the AIR Recommendation. Tenax will be required to pay AIR a termination fee of $1,250,000 under specified circumstances, including if AIR terminates the Merger Agreement as a result of Tenax’s material breach of the Merger Agreement or Tenax’s failure to close the Merger within a specified period after all closing conditions have been satisfied or AIR’s delivery of a written notice to Tenax that all of Tenax’s closing conditions have been satisfied or waived or that AIR is willing to waive any unsatisfied conditions. In the event that either AIR or Tenax terminates the Merger Agreement following a meeting of the AIR Stockholders at which the AIR Stockholders fail to approve the AIR Charter Amendment and the AIR Stock Issuance, AIR shall reimburse Tenax for Tenax’s reasonable and documented out-of-pocket costs and expenses incurred in connection with the execution of the Merger Agreement and the consummation of the Merger, up to $500,000.
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Support Agreements
Certain AIR Stockholders have entered into an AIR Stockholder Support Agreement, pursuant to which such AIR Stockholders have agreed, among other things, to vote their shares of AIR Common Stock in favor of the AIR Charter Amendment and the AIR Stock Issuance and against any competing proposal. In addition, Tenax Members owning a majority of the outstanding membership interests of Tenax have entered into a Tenax Member Support Agreement, pursuant to which they have agreed, among other things, to consent to the Merger and the terms and provisions of the Transaction Documents.
Tender Offer
Within five Business Days following the Closing, if the volume weighted average price of AIR Common Stock during the 20 Trading Days preceding the Closing is less than the Debt Adjusted AIR Share Price, AIR will commence a tender offer (the “Tender Offer”) to purchase up to 1,000,000 shares of AIR Common Stock at a purchase price equal to the Debt Adjusted AIR Share Price, net to the holders of AIR Common Stock prior to the Merger in cash, without interest. The Tender Offer will remain open for not less than 20 Business Days, subject to extension by AIR under certain circumstances.
Redemption Rights Agreement
Prior to the Closing, AIR will declare and issue as a dividend to AIR Stockholders as of the Business Day immediately prior to the Closing Date a right to cause AIR to redeem shares of AIR Common Stock that such AIR Stockholders then own and continue to own on the first anniversary of the Closing. Such redemption rights will entitle the holders thereof to require AIR to purchase all or a portion of such AIR Stockholder’s shares of AIR Common Stock for a redemption price, payable in cash, equal to 107.3% of the Debt Adjusted AIR Share Price, if the volume weighted average price of AIR Common Stock during the 20 Trading Days preceding the first anniversary of the Closing is lower than 107.3% of the Debt Adjusted AIR Share Price. Such redemption rights will not be transferable
Lock-Up Agreements and Registration Rights Agreement
Prior to the Closing, AIR and Thomas Foley, Chief Executive Officer, Chairman and a director of Tenax, and Taran Bakker, a director of Tenax, will enter into Lock-Up Agreements restricting transfers of AIR Common Stock held directly or indirectly by Mr. Foley and Mr. Bakker for 180 days after the Closing. In addition, prior to the Closing, AIR and the Tenax Members will enter into a Registration Rights Agreement granting (i) Mr. Foley and Mr. Bakker and certain of their respective affiliates customary demand rights and (ii) the Tenax Members piggyback registration rights, in each case for the resale of the shares of AIR Common Stock held by the Tenax Members.
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Disclaimer
The foregoing descriptions of the Merger Agreement, the AIR Stockholder Support Agreement, the Tenax Member Support Agreement, the Tender Offer, the Redemption Rights Agreement, the Lock-Up Agreements and the Registration Rights Agreement do not purport to be complete and are subject to, and qualified in each case in its entirety by reference to, the full text of the Merger Agreement and the Transaction Documents that are exhibits thereto, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Merger Agreement and the Transaction Documents that are exhibits thereto and the above descriptions have been included to provide investors and security holders with information regarding the terms of the Transactions. They are not intended to provide any other factual information about AIR or Tenax. The representations, warranties and covenants contained in each of the Transaction Documents were and will be made only for purposes of that agreement and as of the dates specified therein, were and will be made solely for the benefit of the parties to such Transaction Documents and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes of allocating contractual risk between them, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under any of the Transaction Documents and should be aware that the representations, warranties and covenants or any description thereof may not reflect the actual state of facts or condition of AIR, Merger Sub and Tenax. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of each of the Transaction Documents. Further, investors should read the Transaction Documents not in isolation, but only in conjunction with the other information that AIR includes in reports, statements and other filings it makes with the U.S. Securities and Exchange Commission (the “SEC”).
Item 3.02 – Unregistered Sales of Equity Securities
The disclosure contained in Item 1.01 above is hereby incorporated into this Item 3.02 by reference.
Item 7.01 – Regulation FD Disclosure
On February 17, 2026, AIR and Tenax issued a joint press release in connection with the announcement of the execution of the Merger Agreement. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information contained in this Item 7.01, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |
| 2.1* | Agreement and Plan of Merger, by and among Air Industries Group, a Nevada corporation (“AIR”), Tenax Aerospace Acquisition, LLC, a Delaware limited liability company, and Transitory Air Merger Sub LLC, a Delaware limited liability company and wholly owned Subsidiary of AIR. | |
| 99.1 | Joint Press Release of Air Industries Group and Tenax Aerospace Acquisition, LLC, dated February 17, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| * | Exhibits and schedules to the Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. AIR hereby undertakes to furnish supplementally copies of any of the omitted exhibits or schedules to the SEC upon its request. |
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No Offer or Solicitation
This report is not intended to, and does not constitute or form part of, an offer, invitation or the solicitation of an offer or an invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.
Cautionary Statement Regarding Forward-Looking Statements
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements may reflect AIR’s expectations, beliefs, hopes, intentions or strategies regarding, among other things, the Transactions between AIR and Tenax, the expected timetable for completing the Transactions, the benefits and synergies of the Transactions and future opportunities for the combined company, as well as other statements that are other than historical fact, including, without limitation, statements concerning future financial performance, future debt and financing levels, investment objectives, implications of litigation and regulatory investigations and other management plans for future operations and performance. Words such as “anticipate(s)”, “expect(s)”, “intend(s)”, “plan(s)”, “target(s)”, “project(s)”, “believe(s)”, “will”, “aim”, “would”, “seek(s)”, “estimate(s)” and similar expressions are intended to identify such forward-looking statements.
Forward-looking statements are based on management’s current expectations, projections, estimates, assumptions and beliefs and are subject to a number of known and unknown risks, uncertainties and other factors that could lead to actual results materially different from those described in the forward-looking statements. AIR can give no assurance that its expectations will be attained. AIR’s actual results, liquidity and financial condition, as well as the Debt Adjusted AIR Share Price, may differ from the anticipated results, liquidity and financial condition, and the Debt Adjusted AIR Share Price, indicated in these forward-looking statements. AIR cautions readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause AIR’s actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, but without limitation:
| ● | the parties’ ability to consummate the Transactions and to meet expectations regarding the timing and completion thereof; |
| ● | the satisfaction or waiver of the conditions to the completion of the Transactions, including the receipt of all required regulatory approvals or clearances in a timely manner and on terms acceptable to AIR; |
| ● | the risk that the parties may be unable to achieve the expected strategic, financial and other benefits of the Transactions within the expected time-frames or at all; |
| ● | the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected; |
| ● | the risk that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the Transactions; |
| ● | the risk that the combined company’s net debt at the Closing will be higher than currently anticipated; |
| ● | the risk that AIR will not obtain the required AIR Stockholder Approvals; |
| ● | the risk that the Debt Adjusted AIR Share Price at the Closing may be lower than $3.44 per share; and |
| ● | general economic and market conditions. |
These and other risks and uncertainties are more fully discussed in the risk factors identified in “Item 1A. Risk Factors” in Part I of AIR’s most recently filed Annual Report on Form 10-K, and as may be identified in AIR’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except to the extent required by law, AIR expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in AIR’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AIR INDUSTRIES GROUP | ||
| Date: February 17, 2026 | By: | /s/ Scott Glassman |
| Scott Glassman | ||
| Chief Financial Officer | ||
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Exhibit 99.1
February 17, 2026 7:01 AM Eastern Standard Time
PRESS RELEASE
Tenax Aerospace and Air Industries Group Announce Strategic Combination to Form Scaled Aerospace and Defense Platform
Combination brings together special mission aviation and precision aerospace manufacturing to create a diversified mid-cap company expected to remain listed on NYSE American
Bayshore, N.Y. and Ridgeland, MS — (BUSINESS WIRE) -- Tenax Aerospace Acquisition, LLC (“Tenax”) and Air Industries Group (“Air”) (NYSE American: AIRI) jointly announced today that they have entered into an Agreement and Plan of Merger (‘Merger Agreement”) to combine Tenax’s special mission aviation business with Air’s precision aerospace manufacturing business. The merging of the companies will create a larger and more diversified company well-positioned to serve the needs of their government and commercial customers. After the merger, the combined company expects to remain listed on the NYSE American under the symbol AIRI.
Based on preliminary and unaudited results for the fiscal year ended December 31, 2025, the combined company would have reported approximately $183.3 million of revenue with Adjusted EBITDA of approximately $65.0 million (see definition and reconciliation to GAAP financial measures below). The combined company today would have net debt of approximately $380.0 million (which includes $80.0 million in debt incurred in January of 2026 as a result of a refinancing at Tenax to purchase minority membership interests in Tenax). Net debt at the anticipated closing of the merger is expected to be up to $30.0 million lower than currently as a result of expected cash flow from operations and the expected sale of Tenax aircraft currently held for sale.
Based primarily on Tenax’s current contract run rate and excluding the impact of expenses related to Tenax’s January refinancing and the merger, the combined company is expected to generate pro-forma 2026 revenues in excess of $210.0 million and Adjusted EBITDA in excess of $75.0 million. After the merger, it is expected that the combined company will employ approximately 430 employees. Tom Foley, current Chairman of Tenax, is expected to become Chairman of the combined companies.
Leadership Commentary
Tom Foley, Chairman of Tenax, said: “This merger represents an important step for Tenax’s plans to expand its presence in the aerospace and defense sector. Partnering with Air Industries Group provides Tenax with a public listing for its shares, manufacturing capability, and access to permanent capital to support long-term growth. We look forward to working with Air Industries management to build a larger and more diversified aerospace company.”
Peter Rettaliata, Chairman of Air Industries Group, added: “The Board of Directors and management of Air believe this strategic merger is compelling. It represents an excellent outcome for Air shareholders, who will participate in a stronger combined company with a broader range of aerospace and defense products and the benefits of additional expertise and resources. Together, we believe the combined company will be well-positioned to create future value for both our customers and our shareholders.”
Transaction Overview
At the time of the merger, Air will issue shares of its common stock to holders of Tenax membership units. After the closing, Tenax shareholders are expected to own approximately 95% of Air’s outstanding shares while existing Air shareholders are expected to own approximately 5%. In accordance with the Merger Agreement and concurrent with the merger, two directors of Air will be selected jointly by the current Air board of directors and Tenax. Tenax will select six or more additional directors.
The transaction is not conditioned upon the receipt of financing by Tenax. Air’s existing indebtedness is expected to be refinanced at closing.
The exact number of shares to be issued to Tenax members will be determined based on a calculation of “AIR Net Indebtedness” (as defined in the Merger Agreement) which will establish the “Debt Adjusted AIR Share Price” (as defined in the Merger Agreement). Based on Air’s preliminary balance sheet as of December 31, 2025, this calculation results in a Debt Adjusted AIR Share Price of approximately $3.44 per Air share which would result in the issuance of approximately 112.5 million shares of Air common stock to Tenax members. The final merger price and resulting ownership percentages will be determined based on AIR Net Indebtedness calculated as of the end of the month-end most recently completed more than 15 days prior to closing.
If the average volume weighted price of Air’s common stock during the twenty trading days prior to the closing is less than the Debt Adjusted AIR Share Price, the Merger Agreement calls for Air to commence a tender offer to acquire up to one million shares of Air’s current shareholders’ common stock. In addition, on the first anniversary of the merger, shareholders of Air as of the business day immediately prior to the closing of the merger will have a contingent right, subject to specified conditions, to require Air to redeem their remaining shares if the twenty-day volume weighted average price for Air shares preceding such anniversary is less than 107.3% of the Debt Adjusted AIR Share Price. This redemption right will not be transferable.
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The transaction remains subject to approval by Air shareholders, customary regulatory filings and U.S. government approvals, and other closing conditions typical for transactions of this size and type. Air’s directors and all of its named executive officers have agreed to vote any shares they hold in favor of the merger. The companies currently expect the merger to close before June 30, 2026, subject to satisfaction of these closing conditions.
About Air Industries Group
Air is a leading manufacturer of precision components and assemblies for large aerospace and defense prime contractors. Its products include landing gears, flight controls, engine mounts and components for aircraft jet engines, ground turbines and other complex machines. Whether it is a small individual component or complete assembly, its high-quality and highly reliable products are used in mission-critical operations essential for the safety of military personnel and civilians. Air operates two primary manufacturing facilities located in Bayshore, New York and Barkhamsted, Connecticut, and currently employs approximately 175 people.
For more information, visit www.AirIndustriesGroup.com.
About Tenax Aerospace
Tenax is a leading provider of special mission aircraft and related services to the U.S. and Canadian Governments and other customers. The company focuses on enduring special mission aviation programs critical to national security and the public interest, including aerial fire suppression, airborne ISR, airborne engagement simulation and airborne sensor testing and training. Founded in 2001, Tenax is privately owned and headquartered in Ridgeland, Mississippi. Tenax currently employs approximately 255 people.
For more information, visit www.TenaxAerospace.com.
Forward-looking Statements
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements may reflect Air’s expectations, beliefs, hopes, intentions or strategies regarding, among other things, the transactions between Air and Tenax, the expected timetable for completing the transactions, the benefits and synergies of the transactions and future opportunities for the combined company, as well as other statements that are other than historical fact, including, without limitation, statements concerning future financial performance, future debt and financing levels, investment objectives, implications of litigation and regulatory investigations and other management plans for future operations and performance. Words such as “anticipate(s)”, “expect(s)”, “intend(s)”, “plan(s)”, “target(s)”, “project(s)”, “believe(s)”, “will”, “aim”, “would”, “seek(s)”, “estimate(s)” and similar expressions are intended to identify such forward-looking statements.
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Forward-looking statements are based on management’s current expectations, projections, estimates, assumptions and beliefs and are subject to a number of known and unknown risks, uncertainties and other factors that could lead to actual results materially different from those described in the forward-looking statements. Air can give no assurance that its expectations will be attained. Air’s actual results, liquidity and financial condition, as well as the Debt Adjusted AIR Share Price, may differ from the anticipated results, liquidity and financial condition, and the Debt Adjusted AIR Share Price, indicated in these forward-looking statements. Air cautions readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause Air’s actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, but without limitation:
| ● | the parties’ ability to consummate the transactions and to meet expectations regarding the timing and completion thereof; | |
| ● | the satisfaction or waiver of the conditions to the completion of the transactions, including the receipt of all required regulatory approvals or clearances in a timely manner and on terms acceptable to Air; | |
| ● | the risk that the parties may be unable to achieve the expected strategic, financial and other benefits of the transactions within the expected timeframes or at all; | |
| ● | the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected; | |
| ● | the risk that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transactions; | |
| ● | the risk that the combined company’s net debt at closing will be higher than currently anticipated; | |
| ● | the risk that Air will not obtain the required Air shareholder approvals; | |
| ● | the risk that the Debt Adjusted AIR Share Price at closing may be lower than $3.44 per share; and | |
| ● | general economic and market conditions. |
These and other risks and uncertainties are more fully discussed in the risk factors identified in “Item 1A. Risk Factors” in Part I of Air’s most recently filed Annual Report on Form 10-K, and as may be identified in Air’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except to the extent required by law, Air expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Air’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
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Non-GAAP Financial Measures and Reconciliation to GAAP
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), both Tenax and Air use Adjusted EBITDA, a Non-GAAP financial measure as defined by the SEC, as a supplemental measure of operating performance because each respective company believes it is useful for understanding and evaluating operating performance. Adjusted EBITDA excludes the impact of non-cash depreciation and amortization charges, stock-based compensation expenses, and certain non-recurring expenses and outlays, prior to consideration of the impact of other potential sources and uses of cash, such as working capital items.
These definitions may differ from similarly titled measures used by other companies and may be different from the EBITDA calculations used by each company’s lenders for purposes of determining compliance with financial covenants. Non-GAAP measures have limitations as analytical tools because they exclude certain items, including interest expense necessary to conduct each company’s respective business, and therefore should be considered in addition to, and not a substitute for, financial information prepared in accordance with GAAP.
Tenax is currently structured as a partnership for U.S. federal and state income tax purposes and does not pay corporate income taxes at the entity level. Accordingly, income taxes for Tenax and for the combined company following the merger are not reflected in the pro forma Adjusted EBITDA reconciliation presented below.
Please see below for a reconciliation of Adjusted EBITDA to its most directly comparable financial measure for each company calculated and presented in accordance with GAAP. Neither company has quantitatively reconciled forward-looking Adjusted EBITDA to the most directly comparable GAAP measure because certain items that impact these measures, including amortization of stock-based compensation and interest expense, have not yet occurred, are out of each company’s control, or cannot be predicted. For example, quantification of stock-based compensation is not possible as it requires inputs such as future grants and stock prices which are not currently ascertainable. In addition, the combined effect of the company’s post-combination tax structure and effective tax rate for fiscal 2026 cannot yet been determined.
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| Unaudited and Preliminary Results | ||||||||||||
| FY 2025 | AIR | Tenax | Pro-Forma | |||||||||
| AIR Net (Loss) and Tenax Pre-Tax Income* | $ | (1,305,000 | ) | $ | 18,897,000 | $ | 17,592,000 | |||||
| Interest Expense | 1,841,000 | 22,390,000 | 24,231,000 | |||||||||
| Stock Compensation Expense | 1,047,000 | - | 1,047,000 | |||||||||
| Depreciation | 2,696,000 | 13,392,000 | 16,088,000 | |||||||||
| Amortization | 68,000 | 5,715,000 | 5,783,000 | |||||||||
| Adjusted EBITDA | $ | 4,347,000 | $ | 60,394,000 | $ | 64,741,000 | ||||||
| * - | Because of its negative taxable income, Air did not pay income taxes in 2025. Tenax is currently a partnership for U.S. federal and state income tax purposes and does not pay corporate income taxes at the entity level. As a result, no income taxes for Air or Tenax are reflected in the pro forma income for the companies and, therefore, there are no income taxes to add back in the calculation of EBITDA. If the companies had actually been combined during the period as contemplated in the merger agreement, the combined company would have paid income taxes, but it is not possible on a pro forma basis to determine the amount of those taxes. However, the calculation of EBITDA, if income taxes were able to be determined, would not be affected by those taxes because income taxes are deducted from income and then added back in the calculation of EBITDA. |
Additional Information and Where to Find It
This press release is being made in respect of a proposed business combination involving Air and Tenax. This press release does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote or approval nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
The proposed transaction will be submitted to the shareholders of Air for their consideration. Air also intends to file a proxy statement and other documents with the SEC regarding the proposed transaction. This press release is not a substitute for any proxy statement or any other document that Air may file with the SEC in connection with the proposed transaction. Promptly after filing its definitive proxy statement with the SEC, Air intends to mail the definitive proxy statement and a proxy card to each shareholder entitled to vote at the special meeting relating to the proposed transaction. Investors and security holders of Air are urged to read the proxy statement (including all amendments and supplements thereto) and any other relevant documents relating to the proposed transaction that will be filed with the SEC carefully and in their entirety when they become available because they will contain important information about the proposed transaction. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov).
Air and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about Air’s directors and executive officers is available in Air’s proxy statement for its 2025 Annual Meeting of Stockholders filed with the SEC on May 5, 2025. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC regarding the merger when they become available. Investors should read the proxy statement carefully when it becomes available before making any voting or investment decisions.
Tenax Contact:
Emily Dattilo Gregory
edattilo@gregoryagency.com
Air Contact:
Scott Glassman
Chief Financial Officer
scott.glassman@airindustriesgroup.com
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