Tag: Citigroup

Air Lease Corporation Initiates Portfolio Sale of 19 Aircraft to Thunderbolt III Aircraft Lease Limited

November 13, 2019 / WIL BALDWIN

LOS ANGELES, November 11, 2019 – Air Lease Corporation (the “Company” or “ALC”) announced today that the Company initiated the sale of a portfolio of 19 aircraft to Thunderbolt III Aircraft Lease Limited (“Thunderbolt III”), a newly formed entity, and Thunderbolt III has now completed its equity and debt financing transactions. The aircraft comprise a mix of narrowbody and widebody jet aircraft that, as of August 31, 2019, had a weighted average age of 9.7 years and were leased to 18 lessees based in 15 countries. ALC and its Irish affiliate, ALC Aircraft Limited, will act as servicers with respect to the aircraft and ALC will act as portfolio manager. ALC estimates that the process of transfer and sale of the majority of aircraft will occur progressively during Q4 2019 and Q1 2020.

The Thunderbolt III structure included two series of Fixed Rate Notes and Equity Certificates. Approximately 15.6865% of the Equity Certificates were purchased by the anchor investor which is an investment vehicle managed by ITE Management L.P. and approximately 5% of the Equity Certificates were purchased by ALC.

Proceeds from the issuance of the Notes and the Equity Certificates will be used to acquire the aircraft, fund certain accounts for the Notes and pay certain expenses.

“We are pleased to announce the closing of Thunderbolt III. This transaction allows ALC to efficiently sell 19 aircraft while retaining the customer relationships through our continued management of these aircraft. I would like to thank our team and the Thunderbolt III investors for making this a successful transaction,” said Gregory B. Willis, Executive Vice President and Chief Financial Officer of ALC.

Mizuho Securities acted as Global Coordinator, Mizuho Securities, BofA Securities and Goldman Sachs & Co. LLC acted as Joint Lead Structuring Agents and Joint Lead Bookrunners, Wells Fargo Securities acted as Joint Lead Bookrunner, and BNP PARIBAS, Citigroup, J.P. Morgan, MUFG, RBC Capital Markets, SOCIETE GENERALE and SunTrust Robinson Humphrey acted as Passive Bookrunners (for the Notes) and Co-Managers (for the Equity Certificates).

Hughes Hubbard & Reed LLP acted as U.S. counsel to ALC and the Issuers, and Milbank LLP acted as U.S. counsel to the Global Coordinator, the Joint Lead Structuring Agents and the Joint Lead Bookrunners. EY acted as U.S. and Irish tax advisors. Walkers acted as Cayman Islands counsel and A&L Goodbody acted as Irish counsel. Vedder Price P.C. acted as counsel for ITE.

Canyon Financial Services Limited will act as the managing agent for the Issuers. Citibank, N.A. will act as trustee, security trustee, paying agent and operating bank. Wells Fargo Bank, N.A. will also act as the liquidity facility provider. DealVector, Inc. will provide certain investor services for the holders of the Notes and Equity Certificates.

Aircraft Lessor Aircastle to be Bought in $2.4 Billion Deal

November 6, 2019 / WIL BALDWIN

Nov 6 (Reuters) – Aircastle Ltd said on Wednesday Japan’s Marubeni Corp and Mizuho Leasing Co Ltd had offered to buy the aircraft lessor in a deal valued at $2.4 billion, ending a nearly two-week long strategic review of its business.

Shares of the company rose 16% to trade in line with the offer price of $32 per share. Marubeni, the company’s largest shareholder, has a 29% stake in Aircastle as of Oct. 23 that is currently valued at about $600 million.

Aircastle, which owned and managed 277 aircraft in 48 countries as of Sept. 30, counts American Airlines, Southwest Airlines and United Airlines among its customers.

Airline bankruptcies have increased this year at the fastest ever rate, led by the collapse of India’s Jet Airways, British travel group Thomas Cook and Avianca of Brazil, adding pressure on aircraft leasing companies.

Fitch Ratings said in September that it expects the sector to worsen in the medium term with a potential rise in airline bankruptcies, further aircraft repossessions and increased financing costs. (http://bit.ly/2qrjaG5)

The deal, which is valued at $7.4 billion including debt, is expected to close in the first half of 2020, Aircastle said.

Citigroup Global Markets Inc will serve as financial adviser to Aircastle.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Shinjini Ganguli and Anil D’Silva)

Brookfield, GIC to Buy Railroad Owner Genesee & Wyoming

July 1, 2019 / WIL BALDWIN

July 1 (Reuters) – Canada’s Brookfield Asset Management Inc and Singaporean sovereign wealth fund GIC on Monday agreed to buy U.S. freight railroad owner Genesee & Wyoming Inc for about $6.4 billion in cash.

Brookfield and GIC’s offer of $112 per share represents a premium of 12 percent to Genesee’s closing price on Friday. Genesee shares were up about 8 percent in trading before the bell.

Including debt, the deal is valued at about 8.4 billion, the companies said in a statement.

Genesee & Wyoming’s revenue have increased at a compound annual growth rate of 16.8% since it floated in the stock market in 1996, rising to $2.3 billion in 2018 from $77.8 million, according to Genesee & Wyoming’s latest annual report.

The company owns a portfolio of 120 short-line railroads, predominantly in North America, with operations in Europe and Australia.

Reuters had reported on the deal on Sunday, citing sources.

The deal, which is expected to close by year end or early 2020, would be the latest big leveraged buyout by Brookfield, which agreed last year to buy Johnson Controls International Plc’s power solutions business for about $13 billion.

Citigroup Global Markets Inc served as the financial adviser to Brookfield and GIC, while BofA Merrill Lynch and Morgan Stanley & Co LLC advised Genesee.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva)

United Technologies & Raytheon to Create Defense Giant

June 10, 2019 / WIL BALDWIN

United Technologies, Raytheon to create $120 billion aerospace and defence giant

(Reuters) – United Technologies Corp agreed on Sunday to combine its aerospace business with U.S. contractor Raytheon Co and create a new company worth about $121 billion, in what would be the sector’s biggest ever merger.

The deal would reshape the competitive landscape by forming a conglomerate which spans commercial aviation and defense procurement. United Technologies provides primarily commercial plane makers with electronics, communications and other equipment, whereas Raytheon mainly supplies the U.S. government with military aircraft and missile equipment.

While United Technologies and Raytheon have some common customers, their business overlap is limited, an argument the companies plan to make once U.S. antitrust regulators start scrutinizing the merger.

However, the two major commercial aircraft makers, Boeing Co and Airbus SE, as well as the Pentagon, have been known to use their significant purchasing power to seek concessions from their suppliers and may not welcome a potential lessening in competition among them.

When United Technologies rebuffed an acquisition offer from Honeywell International Inc in 2016, United Technologies chief executive Greg Hayes justified the decision partly by predicting that Boeing and Airbus would never accept having a supplier that would “build the plane from tip to tail.”

United Technologies has said it is on track to separate its Carrier air conditioning and Otis elevator businesses, leaving the company focused on its aerospace business through its $23 billion acquisition of Rockwell Collins, which was completed in 2018, and the Pratt & Whitney engines business.

Chinese authorities scrutinized the acquisition of airplane parts maker Rockwell Collins closely, given the companies’ footprint in that country’s market. This resulted in the deal closing in November 2018, as opposed to the targeted third quarter.

Trade tensions between the United States and China were blamed at least partly by analysts for that delay, but a source close to the deal said the companies did not expect this to be repeated because Raytheon does not do business in China.

Under the deal announced on Sunday, Raytheon shareholders will receive 2.3348 shares in the combined company for each Raytheon share. The merger is expected to result in more than $1 billion in cost synergies by the end of the fourth year, the companies said.

United Technologies shareholders will own about 57% of the combined business, called Raytheon Technologies Corporation, which will be led by Hayes. Raytheon shareholders will own the remaining stake, and Raytheon CEO Tom Kennedy will be named executive chairman. The companies negotiated the terms over several months, according to the source, who requested anonymity discussing the confidential deliberations.

The deal has been structured so that no shareholder of either company will receive a premium. United Technologies and Raytheon have market capitalizations of $114 billion and $52 billion, respectively.

The deal is expected to close in the first half of 2020.

The newly created company is expected to return between $18 billion and $20 billion of capital to shareholders in the first three years after the deal’s completion, the companies said. The new company will also assume about $26 billion in net debt, they added.

DEFENSE SPENDING RISE

Raytheon, maker of the Tomahawk and the Patriot missile systems, and other U.S. military contractors are expected to benefit from strong global demand for fighter jets and munitions as well as higher U.S. defense spending in fiscal 2020, much of it driven by U.S. President Donald Trump’s administration.

However, Pentagon spending is projected to slow down after an initial boost under Trump. A deal with United Technologies would allow Raytheon to expand into commercial aviation.

Conversely, United Technologies could benefit from reducing its exposure to commercial aerospace clients amid concerns that the rise of international trade protectionism will suppress economic growth and weigh on the flow of goods through air traffic.

The International Air Transport Association, which represents about 290 carriers accounting for more than 80% of global air traffic, cited these concerns earlier this month, when it said the industry is expected to post a $28 billion profit in 2019, down from a December forecast of $35.5 billion.

The deal with Raytheon could put pressure on General Electric Co, which competes with United Technologies for commercial aerospace clients, to seek scale. It could also push other defense contractors, such as Lockheed Martin Corp, to explore expanding their commercial businesses.

Last year, military communication equipment providers Harris Corp and L3 Technologies Inc announced an all-stock merger that, once completed, will create the sixth-largest U.S. defence contractor.

Morgan Stanley, Evercore Inc and Goldman Sachs Group Inc were financial advisers to United Technologies, while Wachtell, Lipton, Rosen & Katz was its legal adviser. Citigroup Inc was financial adviser to Raytheon, and RBC Capital Markets LLC provided a fairness opinion. Shearman & Sterling LLP was legal adviser to Raytheon.

(Reporting by Harry Brumpton and Kate Duguid in New York; Additional reporting by Mike Stone in Washington and Rama Venkat in Bengaluru; Editing by Richard Chang and Rosalba O’Brien)

Airbus Shares Take Off After Bumper Beijing Order

March 26, 2019 / WIL BALDWIN

FILE PHOTO: The Airbus logo is pictured at Airbus headquarters in Blagnac near Toulouse, France, March 20, 2019. REUTERS/Regis Duvignau

PARIS (Reuters) – Airbus shares rose on Tuesday after the European planemaker won a deal worth tens of billions of dollars to sell 300 aircraft to China.

Airbus was up 2.7 percent by 1208 GMT, with the stock having risen nearly 40 percent so far in 2019.

French officials said the deal was worth some 30 billion euros (25.6 billion pounds) at catalogue prices. Planemakers usually grant significant discounts.

The Chinese order was announced late on Monday, coinciding with a visit to Europe by Chinese President Xi Jinping and matching a China record held by U.S. rival Boeing.

Investment bank Citigroup kept its “buy” rating on Airbus.

“We do not have details of the delivery schedule of this order, but China has been taking about 20-25 percent of Airbus production per year and given the A320 family is sold out at announced production rates out to 2024/25, we believe this increases the probability of Airbus moving to a production rate of 70 per month,” wrote Citigroup.

That positive view was echoed by Morgan Stanley, which kept an “overweight” rating on Airbus shares.

“Clearly finalisation of this order is a positive for Airbus, and continues to underpin strong order book coverage and rising production rates in narrowbody,” Morgan Stanley said.

The larger-than-expected order, which matches an order for 300 Boeing planes when U.S. Donald Trump visited Beijing in 2017, follows a year-long vacuum of purchases in which China failed to place significant orders amid global trade tensions.

It also comes as the grounding of the Boeing 737 MAX has left uncertainty over Boeing’s immediate hopes for a major jet order as the result of any warming of U.S.-China trade ties.

(Reporting by Sudip Kar-Gupta; Editing by Leigh Thomas and Jane Merriman)

Chinese EV Maker NIO Stock Rises On U.S. debut

September 12, 2018 / WIL BALDWIN

(Reuters) – Shares of Chinese electric carmaker NIO Inc (NIO.N) recovered sharply from a 15 percent fall in their market debut on Wednesday, a day after the company’s IPO was priced at the lower end of the expected range.

NIO shares rose as much as 11 percent to $6.93 in afternoon trading, giving it a market capitalization of $7.11 billion.

The rebound in shares was a welcome relief for NIO, whose offering came under pressure as investors have turned wary about electric carmakers due to struggles at its chief rival Tesla Inc (TSLA.O).

Investors have worried about Tesla’s cash-burn rate as the company struggles to meet its production targets amid its efforts to become a mass-market automaker.

NIO began deliveries of its ES8 SUVs in June and in August sold 1,121 units. The company plans to launch a second, lower-priced electric sport-utility vehicle, the ES6, by the end of this year.

NIO, founded by Chinese entrepreneur William Li in 2014, incurred a net loss of $502.6 million in the first six months of 2018 on $6.95 million in revenue. It has $677 million in cash and cash equivalents as of June 30.

The listing – the third-biggest in the United States by a Chinese firm this year – comes as Chinese EV makers seek fresh capital to develop new products and finance investments in areas including autonomous driving and battery technologies.

NIO, formerly known as NextEV and backed by Chinese tech heavyweight Tencent Holdings Ltd <0700.HK>, is one of several largely Chinese-funded EV startups betting on the benefits of local production to compete with firms such as Tesla.

Having begun promoting EVs in 2009, China aims to become a dominant global producer as it bids to curb vehicle emissions, boost energy security and promote high-tech industries.

Several EV makers such as WM Motor Technology Co and Xpeng Motor have also raised funds from heavyweight investors including tech giants Alibaba Group Holding Ltd (BABA.N), Baidu Inc (BIDU.O) and Tencent.

Goldman Sachs, JPMorgan and Morgan Stanley led the IPO. Bank of America Merrill Lynch, Credit Suisse, Citigroup, Deutsche Bank and UBS were also part of the process.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva)