TIMCO Aviation Services is an independent provider of aviation maintenance, repair and overhaul (MRO) services for major commercial airlines, regional air carriers, aircraft leasing companies, government and military units, and air cargo carriers. The company also provides modification services for aircraft interiors and manufactures aircraft seating through its Aerosystems and Brice Manufacturing subsidiaries. TIMCO is headquartered in Greensboro, N.C., and has MRO operations in four locations.
- Challenge
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Like many aerospace companies, TIMCO Aviation Services was negatively affected by the 9/11 attacks and the global slowdown in air transportation that followed, despite a good industry reputation and strong customer relationships.
TIMCO took a variety of actions during the 2004-2006 period, which included bringing in new board members and senior managers, taking the company private, restructuring its bank group and beginning an aggressive cost-cutting effort. The management team’s hard work and sacrifice paid off. TIMCO entered 2007 a reenergized company with strong momentum, an improved balanced sheet and a promising future.
It was time for TIMCO to begin the next chapter in its turnaround story, with the help of a financial services partner that could look beyond the balance sheet and recognize the company’s long-term growth potential. TIMCO required a financing partner that understood its business and could deliver a creative solution.
- Solution
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TIMCO and CIT were already well acquainted. CIT refinanced TIMCO’s debt in 2004 with a three-year facility and worked with the company to amend that agreement in 2006. As the agreement was nearing maturity in 2007, the two companies began discussions on continuing and possibly expanding their relationship.
CIT has a business unit dedicated solely to the aerospace, defense and homeland security industries, which sets it apart from most conventional lenders. The Aerospace & Defense Finance unit of CIT Leveraged Finance - Transportation creates custom financial solutions for the aerospace and defense industry, including manufacturers, suppliers and service providers. The aerospace financing specialists from CIT understand the unique characteristics of the aerospace industry.
Because of their knowledge and experience, CIT team members saw in TIMCO a strong and committed leadership team that was taking the tough actions necessary to turn the company around. They also saw a consistent revenue stream, a loyal customer base, significant barriers to entry and a solid position in a growing industry segment.
With its understanding of the aerospace industry and TIMCO’s business, CIT was able to deliver a creative financial solution that facilitates TIMCO’s improving performance and supports its growth opportunities.
- Results
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In late 2007, TIMCO and CIT agreed on a new three-year facility valued at $30 million, which includes a $20 million revolving line of credit and a $10 million term loan. The facility provides TIMCO with the flexibility it needs to support ongoing daily operations and consider strategic growth opportunities.
Aerospace industry megatrends bode well for TIMCO as aircraft operators look for ways to extend the life of their fleets, modify their aircraft with new technology and keep their fleets operating efficiently to reduce fuel costs and meet all regulatory and environmental requirements. At the same time, more operators are looking to outsource MRO work to TIMCO and other leading providers.
