CHEYENNE – Wyoming’s only airline could face immediate seizure “of substantially all” its assets after defaulting on a $27.5 million loan it only secured in December.
In a federal filing, Great Lakes Aviation officials said the company had defaulted on its loan, opening the door to its lender to collect all $27.5 million lent the struggling company, even if that comes in the form of assets. While it is unclear what lender Callidus Capital Corp. will do, the default pushes Great Lakes interest rates from 14 percent to 17 percent.
Earlier this month, the chief financial officer of Great Lakes aviation, Michael Matthews, flew the coop shortly after the default occurred, causing an executive shakeup. Matthews left the company with a cushy severance and consulting agreement that nets him $12,500 per month over the next 10 months. The company hired Stan Gadek, formerly the president and chief executive officer of Minnesota-based Sun Country Airlines, to occupy Matthews’ former role. Gadek didn’t immediately return a request for comment, and Matthews had been unresponsive to Business Report requests long before his final departure.
The $27.5 million loan came about in the eleventh hour to be able to pay off loans from other lenders before the company had to resort to even more drastic measures to stay aloft.
In its most recent quarterly report, company officials said the pilot shortage has been worse than expected, forcing the company to close off legs to many airports like Sheridan County Airport, which has been without passenger service since March 31.
Great Lakes also admitted it doesn’t think it will be able to comply with its loan requirements throughout the rest of 2015, calling to question further the solvency of the company.
The company said it is working through the issues, exploring possibilities ranging from debt and equity financing to selling its aircraft and leasing them back.
“The company cannot make assurances that its assets or cash flow from operations will be sufficient to repay borrowings under its existing debt obligations,” the company’s management said in federal documentation.
The doubts are large enough to cast a stormy shadow over the entire company’s ability to stay in flight, and Great Lakes itself questions its ability “to continue as a going concern,” or a business that can operate indefinitely.
Wyoming Business Report