FWP

Issuer Free Writing Prospectus dated August 8, 2018

Filed Pursuant to Rule 433 under the Securities Act of 1933

Relating to Preliminary Prospectus dated July 30, 2018

Registration No. 333-226173

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Update and Supplement to Preliminary Prospectus

dated July 30, 2018

This free writing prospectus relates to the initial public offering of shares of common stock of Mesa Air Group, Inc. (“Mesa”) and should be read together with the preliminary prospectus dated July 30, 2018 (the “Preliminary Prospectus”) included in Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 333-226173). On August 8, 2018, Mesa filed Amendment No. 3 to the Registration Statement on Form S-1 relating to this offering of common stock (“Amendment No. 3”), which may be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/810332/000119312518242328/d573709ds1a.htm

References to “Mesa,” the “Company,” “we,” “us,” and “our” are used in the manner described in the Preliminary Prospectus. You should read the entire Preliminary Prospectus carefully, especially the “Risk Factors” section and the financial statements and related notes, before deciding to invest in the securities.

The aggregate share number set forth below and in Amendment No. 3 updates and supersedes the information contained in the Preliminary Prospectus under the caption “The Offering” on page 13, which reflected an aggregate share number that was one share higher.

The SARs previously issued under our SAR Plan, which currently settle only in cash, will be cancelled and exchanged for an aggregate of 1,266,034 shares of restricted common stock under our 2018 Plan …

 

1

As set forth below and in Amendment No. 3, certain of the figures presented in the Preliminary Prospectus for pro forma net income per share, weighted average common shares outstanding and pro forma total assets (in the sections captioned “Summary Historical Consolidated Financial and Operating Data” and “Selected Consolidated Financial and Operating Data,” on pages 14 and 50, respectively) were updated as indicated below. In addition, in response to a comment from the Staff of the Securities and Exchange Commission (“SEC”), the information set forth below and included in Amendment No. 3 provides a reconciliation of net income and basic and diluted shares used to calculate pro forma basic and diluted net income per share attributable to common shareholders.

 

    Year Ended September 30,     Six Months Ended
March 31,		  
    2013(1)     2014(1)     2015     2016     2017     2017     2018  
   

(in thousands, except per share data)

  

Net income per share attributable to common shareholders:

              

Pro forma net income per share attributable to common shareholders (unaudited)(4):

              

Basic

           $ 1.54       $ 1.18  
         

 

 

      

 

 

  

Diluted

           $ 0.97       $ 0.76  
         

 

 

      

 

 

  

Weighted-average common shares outstanding:

              

Basic

     7,146,165       7,425,165       7,749,665       9,558,242       10,918,527       10,780,678       11,441,271  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

     23,029,960       22,983,286       24,161,935       24,082,114       23,385,778       23,443,541       23,562,884  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table presents our historical balance sheet data as of March 31, 2018:

 

     As of March 31, 2018  
     Actual      Pro Forma(1)  
     (in thousands)  

Balance Sheet Data:

      

Cash and cash equivalents

    $ 52,699      $ 142,968  

Total assets

      1,342,638        1,432,907  

Long-term debt, including current portion

      929,029        873,379  

Shareholders’ equity

      248,705        395,682  

 

(1)

The unaudited adjusted pro forma consolidated balance sheet gives effect to: (i) the issuance of 10,700,000 shares of our common stock pursuant to this offering; (ii) our application of the net proceeds from this offering as set forth under “Use of Proceeds,” assuming an initial public offering price of $15.00 per share (which is the mid-point of the estimated price range set forth on the cover page of this prospectus); and (iii) the issuance of 966,022 shares of restricted common stock under our 2018 Plan immediately following the completion of this offering as part of the 2018 Plan Issuances. For a description of the method used to calculate the number of shares of restricted common stock to be issued under the 2018 Plan immediately after this offering, see “Shares Eligible for Future Sale—Proposed Equity Exchange and 2018 Plan Issuances” elsewhere in this prospectus. See “Use of Proceeds” for a description of the assumptions underlying the pro forma data related to our anticipated use of proceeds.

 

2

The following table sets forth a reconciliation of net income and basic and diluted shares used to calculate pro forma basic and diluted net income per share attributable to common shareholders:

 

     Year Ended
September 30,		     Six Months
Ended March 31,		  
     2017     2018  
     (in thousands, except per
share data)		  

Reconciliation:

     

Net income

    $ 32,828     $ 24,996  

Pro forma adjustment to reflect reduction of interest expense related to the repayment of outstanding indebtedness under our CIT Revolving Credit Facility

      270       742  

Pro forma adjustment to reflect reduction of interest expense related to partial repayment and refinancing of our Spare Engine Credit Facility and Subordinated GECAS Notes(1)

      2,606       2,241  

Pro forma adjustment to reflect tax effect at statutory rates(2)

      (1,007 )      (732 ) 
  

 

 

    

 

 

  

Total pro forma adjustment(3)

      1,869       2,251  
  

 

 

    

 

 

  

Net income used in calculating pro forma net income per share attributable to common shareholders, basic and diluted

    $ 34,697     $ 27,247  
  

 

 

    

 

 

  

Weighted average shares outstanding used to calculate net income per share attributable to common shareholders, basic

      10,918,527       11,441,271  

Pro forma adjustment to reflect issuance of 10,700,000 shares of our common stock pursuant to this offering

      10,700,000       10,700,000  

Pro forma adjustment to reflect issuance of shares of restricted common stock under our 2018 Plan in exchange for vested SARs

      966,022       966,022  
  

 

 

    

 

 

  

Weighted average shares used to calculate pro forma net income per share attributable to common shareholders, basic

      22,584,549       23,107,293  

Effect of dilutive warrants and unvested shares of common stock

      12,467,250       12,121,613  

Pro forma effect of dilutive issuance of shares of restricted common stock under our 2018 Plan in exchange for unvested SARs and unvested restricted stock units

      747,456       747,456  
  

 

 

    

 

 

  

Weighted average shares used to calculate pro forma net income per share attributable to common shareholders, diluted

      35,799,255       35,976,362  
  

 

 

    

 

 

  

Pro forma net income per share attributable to common shareholders:

     

Basic

    $ 1.54     $ 1.18  
  

 

 

    

 

 

  

Diluted

      0.97       0.76  

 

(1)

We have received a nonbinding financing letter relating to a proposed refinancing of the Spare Engine Credit Facility and Subordinated GECAS Notes, which, if completed, would reduce the applicable interest rate from LIBOR plus a spread ranging from 7.25% to 7.50% to LIBOR plus 4.0%. For each 1/8 percent variance in the applicable interest rates in excess of LIBOR plus 4.0%, pro forma interest expense would change by approximately $0.05 million and $0.04 million, respectively, for the periods presented.

(2)

We have used a blended federal statutory income tax rate of 24.5% on taxable income earned during our 2018 fiscal year as a result of the Tax Cuts and Jobs Act (the “Tax Act”). For our 2017 fiscal year, we used a federal statutory income tax rate of 35%.

(3)

See “Use of Proceeds” for a description of the assumptions underlying the pro forma data related to our anticipated use of proceeds.

 

3

The following assumptions set forth below and in Amendment No. 3 update and supersede the information contained in the Preliminary Prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” on page 70 to reflect a refinanced interest rate of LIBOR plus 4.0%:

We estimate that a refinancing of our existing indebtedness under our Spare Engine Facility and the Subordinated GECAS Notes could decrease our interest expense by an aggregate of approximately $13.7 to $16.1 million from our 2019 fiscal year to our 2021 fiscal year, assuming a refinanced interest rate of LIBOR plus 4.0%.

The Company has filed a registration statement (including the Preliminary Prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the Preliminary Prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, a copy of the Preliminary Prospectus related to the offering may be obtained from Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, FL 33716, telephone: (800) 248-8863, email: prospectus@raymondjames.com; or BofA Merrill Lynch, Attention: Prospectus Department, NC1-004-03-43, 200 North College Street 3rd Floor, Charlotte, NC 28255-0001, email: dg.prospectus_requests@baml.com.

 

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