Sky Harbour Group Corp Debt Disclosure

11.	Bonds payable, loans payable and interest

 

Bonds payable

 

On May 20, 2021, Sky formed a new wholly-owned subsidiary, Sky Harbour Capital LLC, as a parent corporation to its wholly-owned subsidiaries that operate each of the aircraft hangar development sites under its first six ground leases. Sky Harbour Capital LLC and these subsidiaries form an Obligated Group (the “Obligated Group” or the “Borrowers”) under a series of bonds that were issued in September 2021 with a principal amount of $166.3 million (the “Series 2021 Bonds”). The members of the Obligated Group are jointly and severally liable under the Series 2021 Bonds. SHG and its other subsidiaries are not members of the Obligated Group and have no obligation to repay the bonds.

 

The Series 2021 Bonds are payable pursuant to a loan agreement dated September 1, 2021 between the Public Finance Authority (of Wisconsin) and the Borrowers. The payments by the Borrowers under the loan agreement are secured by a Senior Master Indenture Promissory Note, Series 2021-1 issued by the Obligated Group under an indenture (the “Master Indenture”). The obligations of the Borrowers are collateralized by certain leasehold and sub-leasehold deeds of trust or mortgages on the Borrowers’ interests in the development sites and facilities being constructed at each airport where the Borrowers hold ground leases. In addition, the Borrowers have assigned, pledged and granted a first priority security interest in all funds held under the Master Indenture and all right, title and interest in the gross revenues of the Borrowers. Furthermore, Sky, Sky Harbour Holdings LLC and Sky Harbour Capital LLC have each pledged as collateral its respective ownership interest in any of the Borrowers.

 

The Series 2021 Bonds have principal amounts, interest rates, and maturity dates as follow: $21.1 million bearing interest at 4.00%, due July 1, 2036; $30.4 million bearing interest at 4.00%, due July 1, 2041; and $114.8 million bearing interest at 4.25%, due July 1, 2054. The Series 2021 Bond that has a maturity date of July 1, 2036 was issued at a premium, and the Company received bond proceeds that were $0.2 million above its face value. The bond premium is being amortized as a reduction of interest expense over the life of the bond. Interest is payable on each January 1 and July 1, commencing January 1, 2022. Principal repayments due under the Series 2021 Bonds are paid annually, commencing July 1, 2032.

 

The Company was in compliance with all debt covenants as of December 31, 2025. As of December 31, 2025 and December 31, 2024, the fair value of the Company's Series 2021 Bonds was approximately $140.8 million and $143.8 million, respectively. The fair value of the Company's bonds is estimated utilizing Level 2 inputs including prices for the bonds on inactive markets.

 

The following table summarizes the Company’s Bonds payable as of December 31, 2025 and December 31, 2024:

 

		December 31, 2025				December 31, 2024
Bonds payable:
Series 2021 Bonds Principal		$	166,340			$	166,340
Premium on bonds			249				249
Bond proceeds			166,589				166,589
Debt issuance costs			(4,753	)			(4,753	)
Accumulated amortization of debt issuance costs and accretion bond premium			979				785
Total Bonds payable, net		$	162,815			$	162,621

 

Tax-Exempt Warehouse Facility

 

On  September 4, 2025, Sky Harbour Capital II LLC (“SH Capital II”), an indirect, wholly-owned subsidiary of the Company, entered into a Draw Down Note Purchase And Continuing Covenant Agreement (the “Credit Agreement”), among SH Capital II, the other borrowers party thereto, the lenders party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger (“JPMorgan” or “Administrative Agent”). The Credit Agreement provides for, among other things, a term loan facility in an aggregate principal amount of up to $200 million (the “Term Loan Facility”) at any one time outstanding. The Term Loan Facility provides for borrowings under the Credit Agreement (the “Loans”) to be made by the Lenders from time to time as requested by SH Capital II. The Lenders will make funds available to the Term Loan Borrowers (as defined below) through the purchase of notes issued by the Issuer (as defined below) pursuant to the Loan and Security Agreement (as defined below) so that the Issuer  may fund the Loans to Borrowers. The Loans will mature on  September 4, 2030, subject to any extensions by the Lenders. The Term Loan Facility  may be increased, subject to credit approval, up to an aggregate principal amount of $300 million. 

 

The Credit Agreement provides for Loans to be made from time to time by special purpose subsidiaries of SH Capital II (SH Capital II together with the special purpose subsidiaries, the “Term Loan Borrowers”) for the construction and operation of hangar project facilities at various airports (the “Hangar Projects”), subject to customary phased eligibility criteria. Loans will be secured by the real estate underlying the Hangar Projects, pledges of equity interests in the Term Loan Borrowers and certain revenues of the Term Loan Borrowers. Sky Harbour LLC, the Company’s operating company, and Sky Harbour Holdings II LLC, the holding company of SH Capital II, and Sky Harbour Holdings III LLC (“SKYH III”) will guarantee the Term Loan Borrowers’ obligations under the Loans pursuant to a Parent Guarantee and a Holdco Guaranty, respectively. In addition, pursuant to a Non-Recourse Carveout Guaranty, the Company will be required to guarantee the Term Loan Borrowers’ obligations under the Loans in certain limited circumstances such as misconduct by the Term Loan Borrowers or the primary guarantors. In addition, SKYH III has entered into a Pledge and Security Agreement with the Administrative Agent pursuant to which it will pledge its interest in an account ( the “Facility Cash Flow Account”) into which will be deposited amounts received by Sky Harbour LLC from excess revenues released from the Master Trust Indenture (Security Agreement), dated as of  August 1, 2021, among Sky Harbour Capital LLC, the Obligated Group, and The Bank of New York Mellon, as master trustee, as amended from time to time and as joined from time to time by additional members as permitted therein (the “Term Loan Master Indenture”). No excess revenues are permitted to be released from the Term Loan Master Indenture until, among other things, substantial completion of the projects financed by the Series 2021 Bonds for the benefit of Obligated Group (the “2021 Projects”).

 

Certain events  may disqualify a Hangar Project from further Loans and trigger prepayments such as the cancellation or termination of a construction contract or a ground lease or a material violation of environmental law. The Credit Agreement also has customary and other mandatory prepayment events including the obligation to prepay amounts to bring Company back into compliance with the Leverage Ratio (as defined below).

 

Loans under the Credit Agreement will bear interest at a rate of 80% of the sum of SOFR and 0.10%, plus 200 basis points. Interest payments  may be capitalized, at the option of the Term Loan Borrowers, during the earlier of (i) the first three years of the Term Loan Facility or (ii) the substantial completion of the hangar projects contemplated by the Series 2021 Bonds. The entire principal amount of the Loans is due on  September 4, 2030, unless extended in accordance with the Credit Agreement. Once the outstanding aggregate principal balance of the Loans reaches $25 million, the Term Loan Borrowers are obligated, to have hedges on 50% of the Term Loan Borrowers’ interest rate risk.

 

In accordance with the Credit Agreement, the Term Loan Borrowers have paid an upfront fee equal to 1.50% of the $200 million in Loans commitments. The Credit Agreement also requires the Term Loan Borrowers to pay quarterly commitment fees to the Administrative Agent for the benefit of the secured lenders at the applicable rate per annum set forth below under the caption “Commitment Fee Rate,” based upon the Term Loan Borrowers’ total commitment utilization in effect for each such day during each quarter:

 

Category		Total Commitment Utilization		Commitment Fee Rate
1		≥75%			0.35	%
2		<75% but ≥ 50%			0.45	%
3		<50%			0.55	%

 

The Credit Agreement contains customary affirmative and negative covenants for transactions of this type, including maintenance of financial ratios, debt service reserve requirements, restricted payments test and limitations on the sale, lease, or distribution of assets. The Term Loan Borrowers agreed to comply with historical and projected debt service coverage ratios. The Projected Debt Service Coverage Ratio (the “Projected DSCR”) is based principally on projected EBITDA of Hangar Projects that have reached substantial completion (“Hangar Project EBITDA”) minus certain capital expenditure and taxes divided by the debt service for the next four quarters. The Historical Debt Service Coverage Ratio (the “Historical DSCR”) is based on the Hangar Project EBITDA for the previous four quarters minus the sum of certain capital expenditures plus taxes divided by the interest of debt service for the previous four quarters. For this purpose, “EBITDA” is defined to include amounts in the Facility Surplus Account. Additionally, the Term Loan Borrowers agreed to a Leverage Ratio of 65% (the “Leverage Ratio”). The Leverage Ratio is calculated by dividing total indebtedness of the Term Loan Borrowers by a borrowing base value. The borrowing base value is principally the sum of project costs for the Hangar Projects or, in the case that an existing Hangar Project is used as collateral, net purchase price plus certain reserves established pursuant to the Credit Agreement and financed transaction costs. Commencing three months after the earlier of  September 4, 2028 or a trigger date based on substantial completion of certain Hangar Projects, the Term Loan Borrowers are required to maintain (i) the Historical DSCR, or (ii) the Projected DSCR, in each case determined on the last day of each fiscal quarter of the Term Loan Borrowers, at a ratio of less than 1.25 to 1.00.

 

In connection with the Credit Agreement, SH Capital II entered into a Loan and Security Agreement (the “Loan and Security Agreement”), with Public Finance Authority (of Wisconsin) (the “Issuer”), SH Capital II, the other borrowers party thereto, and the Administrative Agent. The Loan and Security Agreement provides for, among other things, the issuance of up to $200 million of Sky Harbour Obligated Group II Issue, Series 2025 Notes (the “Series 2025 Notes”). If the Lenders under the Credit Agreement approve an increase in the Term Loan Facility, additional Series 2025 Notes will be issued. The Loan and Security Agreement and the Series 2025 Notes further provide for the Issuer to assign all revenues on the Notes to the Administrative Agent for the benefit of the secured lenders and provide for the incorporation of certain covenants from the Credit Agreement and customary terms and conditions for financings of this type.

 

In  October 2025, the Company entered into an interest rate swap (the “Swap Agreement”) for notional amounts of up to $200 million, based on predetermined notional schedule agreement as defined in the Swap Agreement. The Swap Agreement effectively fixes the SOFR component of any loans at or below the notional schedule made under the Term Loan Facility at approximately 2.65%, or 4.73% inclusive of applicable interest rate spreads, for the five-year term. The fair value of the Swap Agreement was immaterial as of December 31, 2025.

 

As of   December 31, 2025, there were no loans outstanding under the Term Loan Facility.

 

Yorkville Promissory Note

 

On December 8, 2025, Sky issued a non-convertible, unsecured promissory note to YA II PN, Ltd., a Cayman Islands exempt limited company, or its registered assigns (“Yorkville”), in the aggregate principal amount of $15 million (the “Yorkville Promissory Note”). The issue price for the Yorkville Promissory Note was 100% of the aggregate principal amount thereof.

 

The Yorkville Promissory Note accrues interest at a rate of 7.75% per annum (or 18% upon the occurrence of an event of default) and matures on June 8, 2027. Beginning on July 8, 2026, and continuing on the same day of each of the twelve successive months thereafter, Sky shall repay a portion of the outstanding balance of the Yorkville Promissory Note in amounts equal to $1.25 million, with $7.5 million and $7.5 million due during the years ended December 31, 2026 and 2027, respectively. The obligations of Sky under the Yorkville Promissory Note are guaranteed by the Company pursuant to a separate guaranty agreement between the Company and Yorkville. The Yorkville Promissory Note contains customary representations and warranties by Sky and the Company and customary events of default. The proceeds of the Yorkville Promissory Note may be used for working capital and general corporate purposes.

 

On December 15, 2025, in connection with and pursuant to the Yorkville Promissory Note, the Company issued 50,000 shares of the Company’s Class A Common Stock to Yorkville. 

 

Vista Loan and Guaranty Agreement

 

On December 4, 2025, Stratus Building Systems, Inc. (“Stratus”) and Overflow Ltd. (“Overflow”, and together with Stratus, the “Stratus Borrowers”), both indirect, wholly-owned subsidiaries of the Company, entered into a Loan and Security Agreement (the “2025 Vista Loan”) with Vista Bank (“Vista”) to refinance the Stratus Borrowers' maturing term loan with Vista (the “2020 Vista Loan”) and certain of Stratus' equipment loans (the “Refinanced Equipment Loans”) then outstanding. The aggregate principal balance of the 2025 Vista Loan was approximately $6.1 million, which can be increased to an aggregate principal balance not to exceed $9.5 million beginning December 31, 2026, subject to the Stratus Borrowers meeting a Fixed Charge Coverage Ratio (the “Vista FCCR”) of not less than 1.40 to 1.00 and other customary covenants. In connection with the 2025 Vista Loan, Sky and Vista entered into a guaranty agreement whereby all of the Stratus Borrowers’ obligations under the Vista Loan will be guaranteed by Sky.

 

Prior to January 31, 2027, the 2025 Vista Loan bears monthly interest at a rate of the greater of (i) the sum of the U.S. Prime Rate and 0.25% or (ii) 5.0%. Beginning on  February 1, 2027, the 2025 Vista Loan will bear fixed interest at a rate of the greater of (i) the sum of the 30-day term SOFR rate and 2.25% or (ii) 5.0%. The 2025 Vista Loan matures December 4, 2035.

 

In connection with the 2025 Vista Loan, the Company recognized an immaterial loss on extinguishment of debt associated with the Refinanced Equipment Loans. 

 

Loans Payable and Finance Leases

 

The following table summarizes the Company's loans payable and finance lease liabilities as of December 31, 2025 and December 31, 2024:

 

			December 31, 2025								December 31, 2024
	Maturity Dates		Weighted-Average Interest Rates				Balance				Weighted-Average Interest Rates				Balance
2020 Vista Loan	December 2025			-			$	-			$	8.43	%		$	7,224
2025 Vista Loan	December 2035			7.25	%			6,090				-				-
Yorkville Promissory Note	June 2027			7.75	%			15,000				-				-
Equipment loans	August 2026 - September 2028			3.79	%			9				8.01	%			270
Finance leases	August 2026 - July 2027			5.98	%			125				5.00	%			41
Total principal amount of loans payable and finance leases				7.53	%			21,224				8.39	%			7,535
Less: unamortized debt issuance costs								(680	)							-
Total Loans payable and finance leases							$	20,544							$	7,535

 

The Company’s contractual principal payments required under its bonds payable and loans payable as of  December 31, 2025 was as follows: 

 

Year Ending December 31,		Contractual Principal Payments
2026		$	7,613
2027			7,593
2028			98
2029			105
2030			113
Thereafter			171,916
Total		$	187,438

  

 

Interest

 

The following table sets forth the details of interest expense:

 

		Year ended
		December 31, 2025				December 31, 2024
Interest		$	7,645			$	7,655
Commitment fees			357				-
Accretion of bond premium and amortization of debt issuance costs			491				201
Total interest incurred			8,493				7,856
Less: capitalized interest			(7,134	)			(7,141	)
Interest expense		$	1,359			$	715