"This transaction reflects the disciplined execution of a plan we communicated in April, 2024," said John Sakys, Chief Financial Officer. "We've taken deliberate steps to optimize our capital structure using our Credit Facility, reducing potential dilution to our shareholders from the use of a hybrid debt instrument while supporting Mesa's long-term growth."The interest rate on the Credit Facility, currently 7.18%, will decrease in line with future Federal Funds Rate reductions, along with an additional 25 basis point reduction triggered when Mesa's net leverage ratio falls below 3.0x which we expect to happen no later than the third quarter of this fiscal year. We expect interest payments for the second quarter of fiscal year 2026 to be approximately $2.7 million, and we expect to make interest payments of $3.1 million or lower in each quarter thereafter, at current outstanding debt levels.
Under the definition in our Credit Agreement, total net leverage ratio is defined as the ratio of total debt minus unrestricted cash in excess of $10 million as compared to 12 months trailing EBITDA. EBITDA, a non-GAAP metric, for purposes of this calculation, is defined as net income plus the sum of interest expense, income tax expense, depreciation, amortization, unusual or non-recurring non-cash charges and stock compensation expense. Our total net leverage ratio was 3.16 as of June 30, 2025. Our strong cash flow profile is sufficient to service our outstanding debt. We made over $7 million in principal payments on our outstanding debt positions in the first quarter of fiscal year 2026 and we expect to make principal payments of approximately $20.0 million for quarters 2 through 4 of fiscal year 2026, with higher payments expected in fiscal year 2027.
The following table reflects the debt that is outstanding on our debt instruments following ...
