Avation PLC TURBO-PROP PORTFOLIO (6443Z)
March 16 2017 - 3:00AM
UK Regulatory
TIDMAVAP
RNS Number : 6443Z
Avation PLC
16 March 2017
AVATION PLC
TURBO-PROP PORTFOLIO
Avation PLC (LSE: AVAP, "Avation" or the "Company"), the
commercial passenger aircraft leasing company, announced on 26
October 2016 that it had received an expression of interest to
purchase a portfolio of 22 ATR 72 aircraft. With the assistance of
a financial adviser the Company ran a global process to consider
the proposal and benchmark alternative bids associated with the
potential sale of such a portfolio.
The Company carefully considered the process for the sale of the
portfolio. It was pleased to receive eight offers for all or parts
of the portfolio. In reviewing the offers, the Company considered
the consequential impact on revenues of the business, the impact to
the Company's credit ratings, lessee diversification and
concentration, the potential for redeployment of the sale proceeds
and other factors.
After due and careful consideration, the Company has decided
that the optimal commercial outcome is a sale of a smaller
portfolio of aircraft. The Company is currently in discussion with
a single commercial lessor for a proposed sale of six existing
leased ATR 72 aircraft. The Company has executed a conditional
letter of intent with the proposed purchaser which has made a $3
million cash deposit, refundable in the event of non-completion.
The transaction is expected to close prior to the end of June 2017
with an economic closing date of 7 of April 2017. The transaction
is subject to entering into definitive sale documentation and the
usual conditions of transactions of this type, including the
purchaser novating debt finance and technical inspections.
Assuming the transaction completes, as it remains conditional,
the outcome is at a price above the Company book value for these
aircraft and releases approximately $31 million in net proceeds to
the Company after transaction costs and debt repayment. The
Directors will carefully consider the redeployment of proceeds
through the acquisition of a diversified portfolio of leased
aircraft.
The Company may pay a dividend in the ordinary course of
business associated with the Company's year-end. There is no
special dividend under consideration in relation to this
transaction.
Executive Chairman Jeff Chatfield said "This was an extremely
positive process for the Company, eight existing and new lessors
were interested in part or all of the ATR portfolio. Many of these
bidders offered to pay cash above book value. But, in our view
selling such a large proportion of our fleet would reduce revenues
too dramatically. Aircraft valuations remain high, with a rush of
new liquidity into the aircraft lessor market. The efficient
redeployment of the proceeds from the sale of 22 aircraft would
therefore be challenging in the current aircraft pricing
environment. In our view the exercise did validate the Company
aircraft valuations and verified our business model.
"In electing to sell six aircraft, we expect to release
approximately $31 million in equity (before costs), which can then
be leveraged. We are confident the proceeds can be redeployed in a
sensible manner in the near term.
"The Company remains extremely confident in the ATR aircraft
which is the leading turboprop in the world with about 85% global
market share. The Company has three ATR-72s to place in 2017 and a
further six in future years with 27 additional options over new
aircraft. The Company plans to continue to invest in ATR-72s in
addition to jet aircraft. Avation PLC is in net growth mode in 2017
and is actively seeking airline sale and lease backs along with
secondary trade transactions with other lessors."
-ENDS-
More information on Avation can be seen at: www.avation.net
Enquiries:
Avation
Jeff Chatfield, Executive T: +65 6252 2077
Chairman
Notes to Editors:
Avation PLC is a commercial passenger aircraft leasing company,
owning and managing a fleet of 40 jet and turboprop aircraft which
it leases to airlines across the world. The Company's customers
include Air France, Air Berlin, Air India, Condor, Flybe, Fiji
Airways, Thomas Cook, Virgin Australia, UNI Air and Vietjet
Air.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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