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Avolon finalizes terms on restructured $5.5 billion bank loans
By Paul A. Harris
Portland, Ore., Jan. 20 – Avolon set pricing on a $500 million 3.5-year term loan B-1 and a $5 billion five-year term loan B-2, according to a market source.
The B-1 tranche priced at Libor plus 225 basis points with no Libor floor and an original issue discount of 99.75, on top of talk.
The B-2 tranche priced Libor plus 275 bps with a 0.75% Libor floor and a discount of 99.5, also on top of talk.
Both term loans have 101 soft call protection for six months.
Also, the ticking fee on the debt was outlined as half the drawn spread starting on day 31, with funding into escrow if the acquisition has not closed by March 20, the source said.
Earlier in the week the deal was in the market as a single $5.5 billion five-year first-lien term loan B.
When the deal was structured as one five-year term loan, talk was Libor plus 325 bps with a 0.75% Libor floor, an original issue discount of 99 and 101 soft call protection for six months.
Financial covenants are maximum loan-to-value ratio, maximum average age of aircraft and collateral concentration ratios.
Morgan Stanley Senior Funding Inc., UBS Investment Bank, Barclays, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., Credit Agricole CIB and SunTrust Robinson Humphrey Inc. are the joint lead arrangers and bookrunners on the deal.
Proceeds will be used to partially finance the acquisition of CIT Group Inc.’s commercial aerospace leasing business for $10 billion.
Other funds for the transaction will come from senior notes.
The transaction is expected to close this quarter, subject to customary conditions and regulatory approvals.
Avolon is an Ireland-based provider of aircraft leasing and lease management services.
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