Thursday 19 October 2017

Avolon raising record $8.5bn to fuel CIT jet leasing takeover

Avolon
Avolon
John Mulligan

John Mulligan

Dublin-headquartered aircraft lessor Avolon is raising $3bn via bond issues to help fund the $10bn acquisition of the aircraft leasing business of CIT Group.

Combined with a new $5.5bn secured term loan finalised by Avolon to complete the CIT transaction, the total raised is believed to be the largest financing transaction ever undertaken in Irish corporate history.

It’s also understood that the offering has been significantly over-subscribed by investors keen to bankroll the CIT acquisition.

Avolon, now owned by China-based HNA’s Bohai aircraft leasing unit, sealed a deal last October to buy CIT’s assets, a transaction that will effectively double the size of Avolon.

Avolon, which was co-founded by Clare native Domhnal Slattery, currently has an owned, managed and on-order fleet of 429 aircraft.

Following the CIT acquisition, it will have about 910. It will also propel Avolon to being the world's third-largest aircraft lessor.

When Avolon clinched the deal to buy the CIT business last October, Mr Slattery told the Irish Independent that he now plans to make Avolon the world's biggest aircraft leasing firm.

A wholly-owned subsidiary of Avolon is raising $1.75bn of 5.25pc senior notes due in 2022, and $1.25bn of 5.5pc senior notes due in 2024. The offering is expected to close on February 3.

Avolon confirmed today that it intends to use the net proceeds from the offering, together with cash on hand, new equity contributed by Avolon’s indirect parent company, Bohai, and $5.5bn of borrowings under a new senior secured term loan facility, to finance the CIT acquisition.

Online Editors

Also in Business