Fly Leasing To Buy Major Aircraft Portfolio

(RTTNews) - Fly Leasing Limited (FLY) announced that it has entered into a definitive agreement with AirAsia Berhad or "AAB" and its subsidiary, Asia Aviation Capital Limited or "AAC", under which FLY will acquire 54 Airbus narrowbody aircraft and seven CFM engines on lease to AAB and its affiliates, and one Airbus narrowbody aircraft on lease to a third-party airline.

In addition, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in 2019.

At the closing of the initial stage of the transaction, FLY will acquire 34 Airbus A320-200 aircraft and seven aircraft engines. Of these aircraft, which have an average age of 6.6 years and a remaining lease term of 6.2 years, 33 are on lease to five different airlines within the AirAsia Group, and one aircraft is on lease to a third-party airline.

In addition to the aircraft acquired in the first stage of the transaction, FLY has agreed to acquire 21 A320neo family aircraft that will be subject to 12-year leases to AirAsia Group airlines. These 21 aircraft are scheduled to deliver new from the manufacturer between 2019 and 2021.

In the final stage of the transaction, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in 2019.

As per the terms of the agreement, AAB will receive about $1.0 billion in cash and 3.33million newly-issued FLY shares at $15.00 per share as part of the initial stage of the transaction. The shares acquired by AAB will be subject to lock-up arrangements through 2021, and voting and standstill agreements, and will be entitled to registration rights.

In addition, an affiliate of Onex Corporation and the management team of BBAM Limited Partnership will each acquire 666,667 newly-issued FLY shares at $15.00 per share, for total consideration of $20 million. When added to pre-existing shareholdings by Onex and the BBAM management team, these investors will hold a total of 5.5 million shares, or 17% of the company's proforma outstanding shares.

The transaction is expected to close in the second and third quarters of 2018, subject to approval by AAB shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.