8-K: Air Industries, Tenax Merge to Form Diversified Aerospace Platform

Air Industries Group and Tenax Aerospace Acquisition, LLC announce a strategic merger, creating a diversified aerospace and defense company with Tenax shareholders owning approximately 95% of the combined entity.

Summary

• Air Industries Group (AIR) entered into an Agreement and Plan of Merger with Tenax Aerospace Acquisition, LLC (Tenax) on February 16, 2026, where Tenax will become a wholly owned subsidiary of AIR.
• AIR will issue 94,400,000 shares of its Common Stock to Tenax members, subject to certain adjustments.
• Following the closing, Tenax members are expected to collectively own approximately 95% of the outstanding AIR Common Stock, while existing AIR stockholders will own approximately 5%.
• The issuance of shares to Tenax members will be made in reliance on an exemption from registration provisions of the Securities Act of 1933.
• Based on AIR's preliminary unaudited balance sheet as of December 31, 2025, the Debt Adjusted AIR Share Price is approximately $3.44 per share, resulting in the issuance of approximately 112.5 million shares of AIR Common Stock.
• Tenax or its affiliates will repay AIR's indebtedness to Webster Bank and Michael and Robert Taglich (directors of AIR) at the closing.
• The merger is subject to customary closing conditions, including the expiration or termination of the Hart-Scott-Rodino Act waiting period, receipt of certain antitrust and government agency approvals, and approval by AIR stockholders.
• AIR stockholders must approve an amendment to increase authorized shares of AIR Common Stock from 20 million to 200 million and approve the issuance of shares to Tenax members.
• If the volume weighted average price of AIR Common Stock during the 20 trading days preceding the closing is less than the Debt Adjusted AIR Share Price, AIR will commence a tender offer to purchase up to 1,000,000 shares from pre-merger AIR shareholders at the Debt Adjusted AIR Share Price.
• Existing AIR stockholders will receive non-transferable redemption rights to require AIR to purchase their shares at 107.3% of the Debt Adjusted AIR Share Price if the 20-day volume weighted average price on the first anniversary of closing is lower than that threshold.
• Lock-Up Agreements will restrict transfers of AIR Common Stock held by Thomas Foley (Tenax Chairman) and Taran Bakker (Tenax director) for 180 days after closing.
• A Registration Rights Agreement will grant Tenax Members customary demand and piggyback registration rights for their AIR Common Stock.
• The combined company is expected to remain listed on the NYSE American under the symbol AIRI.
• Based on preliminary unaudited results for FY 2025, the combined company would have reported approximately $183.3 million of revenue with Adjusted EBITDA of approximately $65.0 million.
• The combined company currently has net debt of approximately $380.0 million, including $80.0 million incurred by Tenax in January 2026 for refinancing to purchase minority membership interests.
• Net debt at the anticipated closing is expected to be up to $30.0 million lower than currently due to expected cash flow from operations and the sale of Tenax aircraft.
• Pro-forma 2026 revenues are expected to exceed $210.0 million and Adjusted EBITDA is expected to exceed $75.0 million.
• The combined company is expected to employ approximately 430 employees.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a strategic move for Tenax to gain public market access and diversify, but it comes at a significant cost to existing AIR shareholders through substantial dilution and a potentially unfavorable share price adjustment relative to historical option pricing. The high pro-forma debt also adds a layer of financial risk.

Positives

• The merger creates a larger and more diversified company, combining special mission aviation with precision aerospace manufacturing.
• Tenax gains a public listing for its shares and access to permanent capital to support long-term growth.
• The combined company is expected to achieve pro-forma 2026 revenues in excess of $210.0 million and Adjusted EBITDA in excess of $75.0 million.
• Expected net debt at closing is projected to be up to $30.0 million lower than current levels due to anticipated cash flow and aircraft sales.
• Existing AIR shareholders will receive contingent redemption rights, allowing them to sell shares back to AIR at 107.3% of the Debt Adjusted AIR Share Price under specific conditions.
• A tender offer for up to 1,000,000 shares will be initiated if the volume weighted average price of AIR Common Stock falls below the Debt Adjusted AIR Share Price, providing a potential liquidity event for some existing shareholders.

Negatives

• Existing AIR shareholders will experience significant dilution, with their collective ownership decreasing from approximately 100% to 5% of the combined company.
• The preliminary Debt Adjusted AIR Share Price of approximately $3.44 per share is substantially lower than the weighted-average exercise price of $6.01 for AIR Stock Options outstanding as of the Capitalization Date, indicating a potential loss of value for option holders and existing equity.
• The combined company will carry a significant net debt of approximately $380.0 million, including $80.0 million from Tenax's recent refinancing.
• There are risks associated with integrating the two businesses, which could lead to difficulties, higher costs, customer loss, and business disruption.
• The expected strategic, financial, and other benefits of the transactions may not be achieved within the anticipated timeframes or at all.

Risks

• The parties' ability to consummate the transactions and meet expectations regarding timing and completion.
• The satisfaction or waiver of conditions to completion, including timely receipt of all required regulatory approvals or clearances on acceptable terms.
• The risk that the parties may be unable to achieve the expected strategic, financial, and other benefits of the transactions.
• The risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming, or costly than expected.
• The risk that operating costs, customer loss, and business disruption (including difficulties in maintaining relationships with employees, customers, clients, or suppliers) may be greater than expected.
• The risk that the combined company's net debt at closing will be higher than currently anticipated.
• The risk that AIR will not obtain the required AIR Stockholder Approvals.
• The risk that the Debt Adjusted AIR Share Price at closing may be lower than $3.44 per share.
• General economic and market conditions.
• Potential litigation or regulatory investigations challenging the merger.

Future Outlook

The combined company expects to remain listed on the NYSE American under the symbol AIRI. It is projected to generate pro-forma 2026 revenues exceeding $210.0 million and Adjusted EBITDA exceeding $75.0 million, based on Tenax's current contract run rate and excluding certain merger-related expenses. The merger is expected to close before June 30, 2026.

Management Comments

• Tom Foley, Chairman of Tenax, stated: "This merger represents an important step for Tenax's plans to expand its presence in the aerospace and defense sector. Partnering with Air Industries Group provides Tenax with a public listing for its shares, manufacturing capability, and access to permanent capital to support long-term growth. We look forward to working with Air Industries management to build a larger and more diversified aerospace company."
• Peter Rettaliata, Chairman of Air Industries Group, added: "The Board of Directors and management of Air believe this strategic merger is compelling. It represents an excellent outcome for Air shareholders, who will participate in a stronger combined company with a broader range of aerospace and defense products and the benefits of additional expertise and resources. Together, we believe the combined company will be well-positioned to create future value for both our customers and our shareholders."

Industry Context

StockSavvy.ai notes this merger creates a more diversified mid-cap player in the aerospace and defense sector by combining special mission aviation with precision manufacturing. This strategy aims to leverage complementary capabilities to serve government and commercial customers more broadly, potentially enhancing competitive positioning against larger, more integrated defense contractors. The move also provides Tenax, a privately-owned entity, with public market access, a common trend for growth-oriented private companies seeking capital and liquidity.

Management Changes

Corporate Governance

Legal Proceedings

• The filing notes a general risk of 'implications of litigation and regulatory investigations' and the need for 'defending or contesting of any Actions challenging this Agreement or the consummation of the Merger'.
• Neither AIR nor Tenax has received written notice of any material violation of laws, nor are there pending or threatened actions that would reasonably be expected to have a material adverse effect on either company.

Related Party Transactions

• Tenax or one of its Affiliates will pay the indebtedness of AIR due to Michael and Robert Taglich, who are directors of AIR, in satisfaction of certain subordinated notes.

Stakeholder Impact

• Shareholders (AIR): Will experience significant dilution, reducing their ownership to approximately 5% of the combined company. A tender offer and contingent redemption rights offer limited downside protection.
• Shareholders (Tenax): Will become the majority owners (95%) of a publicly listed company, gaining liquidity and access to capital for growth.
• Employees (AIR & Tenax): The combined company is expected to employ approximately 430 people. AIR has committed to providing continuing employees with no less favorable base salary/wage and annual cash target bonus opportunity, and aggregate employee benefits for one year post-closing.
• Customers: Expected to benefit from a larger and more diversified company, better positioned to serve government and commercial needs.
• Creditors: Existing AIR indebtedness to Webster Bank and Michael and Robert Taglich will be repaid by Tenax or its affiliates at closing. The combined company will have substantial net debt.

Next Steps

• AIR to call, give notice of, convene, and hold the AIR Stockholders Meeting to obtain AIR Stockholder Approvals.
• AIR to prepare and file a preliminary Proxy Statement with the SEC, and subsequently a definitive Proxy Statement.
• AIR to file the AIR Charter Amendment with the Nevada Secretary of State.
• Tenax to file the Certificate of Merger with the Delaware Secretary of State.
• Expiration or termination of the HSR Act waiting period and receipt of other antitrust and government approvals.
• AIR to cause shares issued in the merger to be approved for listing on the NYSE American.
• If the Closing VWAP is less than the Debt Adjusted AIR Share Price, AIR will commence a tender offer for up to 1,000,000 shares within five business days post-closing.
• AIR and Tenax to finalize and enter into a Redemption Rights Agreement and a Registration Rights Agreement at or prior to closing.
• AIR to deliver written resignation and release letters from directors and officers requested by Tenax prior to closing.
• The merger is expected to close before June 30, 2026.

Key Dates

Recommendation

The merger results in extreme dilution for existing Air Industries Group shareholders, reducing their ownership from 100% to approximately 5%. While the company highlights diversification and growth, the preliminary Debt Adjusted AIR Share Price of $3.44 is significantly below the weighted-average exercise price of $6.01 for outstanding AIR Stock Options, indicating a substantial loss of value for current equity holders. The combined entity also carries a high net debt of $380 million. The tender offer and redemption rights offer limited protection against this significant value transfer. Investors should consider selling due to the severe dilution and unfavorable valuation implied for existing equity.

Keywords

Aerospace, Defense, Merger, Acquisition, Special Mission Aviation, Precision Manufacturing, SEC Filing, Form 8-K, Air Industries Group, Tenax Aerospace, Stock Dilution, Corporate Governance, Shareholder Approval, Tender Offer, Redemption Rights, NYSE American