8-KMaterial Agreements

Blackstone Inc. 8-K Report, Material Agreement (Oct 24, 2007)

Filed October 24, 2007For Securities:BX

Summary

This 8-K filing from The Blackstone Group L.P. (BX) reports on a temporary adjustment to the company's aircraft usage agreement with its Chairman and CEO, Stephen A. Schwarzman. Due to the suspension of the operating license of the charter company managing Mr. Schwarzman's airplane by the FAA, Blackstone entered into a time-sharing agreement with Mr. Schwarzman on October 18, 2007. Under this new agreement, Blackstone will now pay only the direct operating costs plus 100% of the fuel cost for its business use of the aircraft. This arrangement is expected to be slightly less expensive than the previous market-rate charter payments. The company anticipates returning to the prior arrangement within approximately 60 days once Mr. Schwarzman secures a new charter company. Investors should note that Mr. Schwarzman personally funded the purchase and bears all operational costs of the aircraft.

Key Highlights

  • 1Blackstone entered into a temporary aircraft time-sharing agreement with CEO Stephen A. Schwarzman.
  • 2The agreement was necessitated by the FAA suspending the operating license of the charter company managing Mr. Schwarzman's private jet.
  • 3Under the new terms, Blackstone will pay direct operating costs plus 100% of fuel cost for business use, which is expected to be modestly less than prior market-rate payments.
  • 4This is a temporary measure, with plans to revert to previous arrangements within 60 days.
  • 5Mr. Schwarzman personally owns the aircraft and covers all its operating, personnel, and maintenance costs.
  • 6The filing confirms previously disclosed information about the aircraft's ownership and use.

Frequently Asked Questions

Blackstone entered into the agreement because the FAA suspended the operating license of the charter company that previously managed Mr. Schwarzman's airplane. This required Mr. Schwarzman to find a new charter company, and the time-sharing agreement ensures Blackstone's continued business use of the aircraft in compliance with FAA regulations during this transition.

Under the new time-sharing agreement, Blackstone will pay the actual direct operating costs of each trip plus an incremental charge equal to 100% of the cost of fuel for that trip. Blackstone expects these charges to be modestly less than the hourly payments based on current market rates previously made under their prior arrangement.

No, this is a temporary arrangement. Blackstone and Mr. Schwarzman plan to terminate the time-sharing agreement and resume their prior arrangements as soon as Mr. Schwarzman makes arrangements with a new charter company, which is expected within the next 60 days.

As previously disclosed, Mr. Stephen A. Schwarzman personally purchased the airplane and bears all operating, personnel, and maintenance costs associated with its operation. Blackstone only pays for its business use of the aircraft.