8-KMaterial AgreementsFinancial EventsExhibits & Filings

FTAI Aviation Ltd. 8-K Report, Material Agreement (Jul 25, 2022)

Filed July 25, 2022For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) has announced the closing of a private offering for an additional $50.0 million in aggregate principal amount of 10.500% senior secured notes due 2027. These "Additional Notes" were issued at a discount, priced at 94.585% of their principal amount. This issuance brings the total outstanding principal amount of these senior secured notes to $500.0 million, as they are fungible and treated as a single class with the original $450.0 million issued on July 7, 2022. The offering is directly linked to the company's planned spin-off of its infrastructure business, which will operate under the name FTAI Infrastructure Inc. The net proceeds from this note offering are intended to be distributed to the parent company, FTAI, to repay a portion of its outstanding indebtedness. A critical condition for the notes is their escrow arrangement: prior to the spin-off's completion, the notes are secured only by escrowed funds. If the spin-off does not occur by September 10, 2022, the notes will be subject to a special mandatory redemption at 100% of their issue price plus accrued interest, indicating a potential liquidity event if the spin-off is delayed.

Key Highlights

  • 1FTAI Infrastructure LLC closed a $50.0 million offering of additional 10.500% senior secured notes due 2027.
  • 2The Additional Notes were issued at a discount (94.585% of principal), contributing to a total outstanding principal of $500.0 million for these notes.
  • 3The offering is a component of FTAI's planned spin-off of its infrastructure business into a separate entity, FTAI Infrastructure Inc.
  • 4Net proceeds from the note offering will be used by the parent company (FTAI) to repay outstanding indebtedness.
  • 5The Additional Notes are currently held in escrow and are secured by funds in an escrow account until the spin-off is completed.
  • 6A Special Mandatory Redemption will occur at 100% of the issue price plus accrued interest if the spin-off does not close by September 10, 2022.
  • 7Post-spin-off, the notes will be guaranteed by FTAI Infrastructure's subsidiaries and secured by a first-priority lien on substantially all their assets.

Frequently Asked Questions

The primary purpose of issuing the additional $50.0 million in notes is to raise capital in connection with the proposed spin-off of FTAI's infrastructure business. The net proceeds are intended to be used by the parent company, FTAI, to repay a portion of its existing indebtedness.

If the spin-off is not completed by September 10, 2022, the notes are subject to a 'Special Mandatory Redemption.' This means the issuer will be required to redeem all outstanding notes at 100% of the initial issue price, plus any accrued and unpaid interest, effectively returning the principal to investors if the intended corporate restructuring does not materialize.

Prior to the completion of the spin-off, the notes are secured solely by funds held in a segregated escrow account. This means that the collateral backing these notes is not yet the operating assets of the infrastructure business, but rather the cash raised from their issuance. This arrangement highlights the dependency of the note's security and full backing on the successful completion of the spin-off transaction.

The notes carry a 10.500% annual interest rate, payable semi-annually on June 1 and December 1. They mature on June 1, 2027. After the spin-off, the notes will be senior secured obligations of FTAI Infrastructure Inc. and its guarantors, secured by a first-priority lien on substantially all of their assets.