Halifax, Nova ScotiaChorus Aviation to sell its regional aircraft leasing segment, Falko |
Chorus Aviation Inc. has entered into an agreement to sell all assets in its RAL segment, including Falko Regional Aircraft Limited and Chorus’ equity interests in the aircraft investment funds managed by Falko and its affiliates to affiliates of investment funds managed by HPS Investment Partners, LLC (the "Transaction").
The aggregate consideration for the Transaction is approximately $1.9bn, of which $814m is in the form of cash (net of estimated transaction expenses) and $1.1bn is in the form of aircraft debt to be assumed or prepaid by the buyers at closing and the value of the non-controlling interest.
"We are pleased to announce this transaction, which is a catalyst for unlocking the embedded equity value in our RAL segment," said Colin Copp, President and Chief Executive Officer, Chorus. "This is a compelling transaction for shareholders with net proceeds representing a significant premium to the implied market value of the segment6 and at a price consistent with the trading multiples of our aircraft leasing peers."
"This transaction will allow us to significantly reduce our debt and corporate financings, leaving Chorus with strong and predictable free cash flows from our long-term contracts. That will enable us to implement a sustainable return of capital program for our common shareholders and invest in future growth," said Mr. Copp. "We will leverage our deep operational expertise and capabilities to focus our growth on aviation services, as demonstrated by recent growth in Voyageur’s business."
Paul Rivett, Chair, Board of Directors, Chorus, added, "This decision follows rigorous analysis and a sharp focus on accelerating value creation for shareholders. With the macro-economic environment, it became apparent that the transition to an asset light leasing model would take longer than originally anticipated. Shareholders expected a strong, near-term catalyst for value creation. After evaluating various options, we determined that a sale of the RAL segment would give us the flexibility to pursue future growth and return capital to our shareholders faster."
"We support the decision to sell the RAL segment, which allows the company to execute on its strategic plans, and we appreciate management’s efforts in negotiating a favorable transaction for Chorus," said Frank Yu, a Managing Partner in Brookfield’s Special Investments program.
The Transaction is expected to close by the end of this year.
BlueSky Business Aviation News | 1st August 2024 | Issue #759