WILLIS LEASE FINANCE CORP 8-K

What Happened
Willis Lease Finance Corporation announced that it issued $200,000,000 aggregate principal of 2.50% Convertible Senior Notes due May 15, 2031 (issued May 18, 2026). The company entered into an underwriting agreement on May 13, 2026 with Morgan Stanley, BofA Securities and Deutsche Bank (including a 30‑day option for an additional $30,000,000 for over‑allotments). Conversions may be settled in cash, stock or a combination, at the company’s election. Concurrently, the company completed a “delta” placement (281,250 borrowed shares sold by Morgan Stanley to facilitate hedging) that generated no proceeds to Willis. The company also entered into Amendment No. 4 to its revolving credit facility to permit the Notes issuance.

Key Details

• $200,000,000 principal amount of 2.50% Convertible Senior Notes due May 15, 2031; underwriters granted option for up to $30,000,000 additional notes.
• Initial conversion rate: 3.7202 shares of common stock per $1,000 principal (initial conversion price ≈ $268.80 per share).
• Interest payable semi‑annually (May 15 and Nov 15), convertible freely by holders beginning Feb 15, 2031; various earlier conversion and repurchase rights and redemption mechanics apply (redemption option available on/after May 21, 2029 if stock price tests are met).
• Concurrent Delta Offering: 281,250 shares borrowed and sold to facilitate hedging; Willis received no proceeds and issued no new shares. Amendment No. 4 to the Revolving Credit Facility was executed to permit the Notes issuance.

Why It Matters

• Potential dilution: if all $200M of notes are converted into shares at the initial rate, up to ~744,040 new shares could be issued (up to 855,246 shares if the $30M overallotment is exercised). The conversion price ($268.80) is the threshold at which conversion would be economically relevant for noteholders.
• Capital structure and cash flow effects: the Notes are senior, unsecured debt with a relatively low 2.50% coupon, so they add debt while limiting near‑term cash interest costs; conversions or cash settlements in the future could either dilute equity or require cash outlays depending on the Company’s election.
• Credit/contract impact: Amendment No. 4 to the revolver documents confirms the company was authorized under its credit agreements to complete the Notes offering, avoiding an immediate covenant conflict.
• Hedging mechanics: the delta placement involved borrowed shares sold to facilitate investor hedging and did not raise equity proceeds for Willis, so it does not immediately change the company’s outstanding share count.