8-KSecurities & Listing

FTAI Aviation Ltd. 8-K Report, Unregistered Securities Sale (Jun 21, 2018)

Filed June 21, 2018For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) announced the completion of a private offer to exchange made by its indirect wholly owned subsidiary, Jefferson Investment Holdings LLC. This exchange primarily involved third-party holders of Jefferson Terminal, a crude oil logistics and refined product asset company. Through this offer, Jefferson Investment Holdings acquired substantially all of the interests held by these third-party "Eligible Holders" in Jefferson Terminal. In return, the Eligible Holders received Class B Units of Jefferson Investment Holdings. This transaction increases FTAI's effective ownership in Jefferson Terminal from approximately 60% to 80%, consolidating its control over this logistics business. The offer provided liquidity to the Eligible Holders, whose prior interests were subordinate to significant intercompany debt with a high PIK interest rate. The exchange was conducted at a discount to the invested equity value of Jefferson Terminal. The newly issued Class B Units are exchangeable into FTAI common shares at a specified ratio (0.7406 shares per unit) or cash, at the holder's option, though Jefferson Investment Holdings has the right to satisfy exchanges with cash. In a full conversion scenario, approximately 1.92 million FTAI common shares could be issued. These units also entitle holders to distributions equivalent to FTAI's common share distributions, which can be paid in cash or kind. The issuance was made without registration under the Securities Act, relying on exemptions for private placements to accredited investors, indicating no general solicitation or public offering occurred.

Key Highlights

  • 1FTAI Aviation Ltd. (FTAI) subsidiary completed a private exchange offer for interests in Jefferson Terminal.
  • 2FTAI's effective ownership in Jefferson Terminal increased from approximately 60% to 80%.
  • 3Third-party holders of Jefferson Terminal received Class B Units of Jefferson Investment Holdings in exchange for their interests.
  • 4The exchange offered liquidity to third-party holders whose prior interests were subordinate to significant debt.
  • 5The Class B Units are exchangeable into FTAI common shares at a ratio of 0.7406 shares per unit, or for cash, at the holder's option.
  • 6Jefferson Investment Holdings has the option to settle exchanges with cash or common shares.
  • 7The issuance of units and future potential share issuances were conducted under unregistered private placement exemptions (Section 4(a)(2) and Regulation D).

Frequently Asked Questions

The primary purpose was to consolidate FTAI's ownership and control over Jefferson Terminal, its crude oil logistics and refined product assets. It also provided a liquidity event for existing third-party holders of Jefferson Terminal by offering them exchangeable units in a subsidiary that can convert into FTAI common stock or cash.

FTAI's effective ownership in Jefferson Terminal increased significantly from approximately 60% to 80% as a result of its subsidiary acquiring the interests from third-party holders.

If all Class B Units are exchanged for FTAI common shares, it could result in the issuance of approximately 1.92 million new shares. This could lead to potential dilution for existing shareholders. Holders of these units are also entitled to distributions equivalent to FTAI's common share distributions.

No, the securities were offered and issued privately to a specific group of 'Eligible Holders' who were required to be accredited investors. The transaction relied on exemptions from registration under the Securities Act of 1933, meaning there was no general solicitation or public offering.