Avolon has issued two large bond offerings to partially finance its acquisition of CIT via its wholly owned subsidiary company, Park Aerospace Holdings. The $1.75bn five year senior notes priced at 5.25% on Friday, with the $1.25bn seven year notes pricing at 5.50%. The notes will be fully and unconditionally guaranteed by Avolon. The offering is expected to close on or about February 3, 2017, subject to customary closing conditions.
Avolon will use the net proceeds from the offering, together with cash on hand, new equity contributed by indirect parent company, Bohai Capital Holding, and $5.5bn of borrowings under a new senior secured term loan facility, to finance the acquisition of C2 Aviation Capital, the commercial aircraft leasing business of CIT Group. Upon consummation of the acquisition, the notes will be fully and unconditionally guaranteed by certain subsidiaries of C2.
The proceeds from the offering will initially be deposited into an escrow account for the benefit of the holders of the notes. If the acquisition is not consummated within the time periods required under the escrow agreement and, in any event, on or prior to October 6, 2017, the notes will be subject to special mandatory redemption at a redemption price equal to 100% of the initial issue price of the notes, plus accrued and unpaid interest to the redemption date. The acquisition is subject to customary closing conditions and certain required regulatory approvals, as well as Bohai shareholder approval.