8-KMaterial AgreementsFinancial EventsExhibits & Filings

FTAI Aviation Ltd. 8-K Report, Material Agreement (Sep 18, 2018)

Filed September 18, 2018For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) announced the closing of its private offering of $300.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2025. These notes are senior unsecured obligations of the company, ranking equally with existing senior unsecured debt and senior to subordinated debt. They are effectively subordinated to secured debt and structurally subordinated to liabilities of non-guaranteeing subsidiaries. The proceeds from this offering will be used to repay $125.0 million of outstanding borrowings under the company's existing credit agreement, with the remainder allocated for general corporate purposes, including future investments. The issuance of these notes includes covenants that restrict the company and its restricted subsidiaries from engaging in certain activities, such as incurring additional indebtedness and making restricted payments, subject to specified qualifications. In the event of a Change of Control, noteholders will have the right to require the company to repurchase their notes at 101% of the principal amount.

Key Highlights

  • 1FTAI Aviation Ltd. closed a $300.0 million private offering of 6.50% senior unsecured notes due 2025.
  • 2The notes are senior unsecured obligations, ranking equally with existing senior unsecured debt and senior to subordinated debt.
  • 3Proceeds will be used to repay $125.0 million of existing credit agreement borrowings and for general corporate purposes/future investments.
  • 4The indenture imposes covenants restricting debt incurrence, asset encumbrances, and restricted payments by the company and its restricted subsidiaries.
  • 5A Change of Control provision allows noteholders to require repurchase at 101% of the principal amount.
  • 6The notes mature on October 1, 2025, with various redemption options for the company, including a make-whole premium before October 1, 2021.
  • 7The notes have not been registered under the Securities Act of 1933, indicating they were offered in reliance on an exemption from registration.

Frequently Asked Questions

The primary purpose is to repay $125.0 million of existing borrowings under the company's credit agreement, with the remaining proceeds designated for general corporate purposes, including funding future investments. This suggests a strategy to refinance existing debt with longer-term, potentially lower-cost capital and to provide liquidity for growth initiatives.

The notes are classified as senior unsecured obligations. This means they rank equally with other senior unsecured debt and senior to any subordinated debt. However, they are effectively subordinated to any secured debt, as secured creditors have a prior claim on the assets that collateralize their loans. They are also structurally subordinated to any subsidiary debt that does not guarantee these notes.

The indenture contains covenants that limit the ability of FTAI and its restricted subsidiaries to incur additional debt, pledge assets, make restricted payments (like dividends or share repurchases), and engage in certain other transactions. These covenants are designed to protect noteholders by maintaining the company's financial flexibility and asset base but may restrict future strategic actions or capital allocation decisions.

If a Change of Control occurs (as defined in the indenture), holders of these notes have the right to demand that FTAI repurchase their notes. The repurchase price is set at 101% of the principal amount, plus any accrued and unpaid interest. This provides an exit mechanism for investors in the event of a significant change in the company's ownership or control.