ALC and Napier Park launch Blackbird Capital II; Sky Leasing launches debut ABS

Eleanor Steed
By Eleanor Steed August 4, 2017 13:46

ALC and Napier Park launch Blackbird Capital II; Sky Leasing launches debut ABS

Air Lease Corporation (ALC) has entered into a second joint venture with Napier Park Global Capital (Napier Park) to invest in commercial aircraft and leasing them to airlines worldwide. Blackbird Capital II is 90.5% of the equity is owned, through the JV partner, by a pooled investment vehicle of long-term institutional investors managed by Napier Park. ALC owns 9.5% of the joint venture and will not consolidate the entity.

Blackbird Capital II has closed its first round of equity commitments, aggregating $231 million. The fund has the ability to add additional commitments over the next 18 months based on investment opportunities.

Aircraft will be acquired with equity, a planned $650 million warehouse credit facility, and other forms of debt financing.  In contrast to the Blackbird Capital I, the investment window for Blackbird Capital II has been extended from two to four years, allowing for additional flexibility to purchase incremental aircraft alongside ALC’s forward fleet planning work with airlines.  ALC will provide management services over a 12-year period to the joint venture for a servicing fee based upon aircraft assets under management.  In addition, ALC expects to sell two aircraft from its portfolio to the joint venture to initially seed the fund.  Through the joint venture, ALC says it will manage additional aircraft lease transactions to better serve its airline customers and may grow the size of fund as opportunities develop.

“We are excited to continue and grow our partnership with Napier Park and its group of institutional investors following the success of our first fund.  They share ALC’s vision of creating long-term value for both our airline customers and investors through leased aircraft assets,” said Ryan McKenna, Vice President and Head of Strategic Planning of Air Lease Corporation. “The Blackbird Capital platform is an important partnership for ALC’s strategy to continue growing our management business and serves as an additional, flexible source of capital to help our team deliver exceptional results in the global aircraft leasing business.”

The revolving warehouse facility was led by BNP Paribas, as joint lead arranger and agent, and Bank of America as joint lead arranger, and includes Société Générale, Fifth Third Bank, Bank of Tokyo-Mitsubishi UFJ, Citibank and Goldman Sachs.

Hughes Hubbard & Reed advised Blackbird Capital II, Munger Tolles & Olson advised ALC and Sidley Austin advised Napier Park in connection with the formation of the joint venture. Milbank, Tweed, Hadley & McCloy advised the joint lead arrangers and the lenders in connection with the warehouse facility. Hughes Hubbard & Reed advised Blackbird Capital II in connection with the warehouse facility.

Meanwhile, Sky Aviation Leasing (Sky) has launched its debut asset backed securitisation, S-Jets 2017-1, with a three-tranched deal totalling $780.8million, which secures a portfolio of 21 aircraft.

The $657.8 million A notes have an initial LTV of 66.3% and are rated A by Kroll; the $81 million B notes have an initial LTV of 4.5% and are rated BBB by Kroll; and the C notes, totalling $42 million, have an LTV of 78.7% and are rated BB by Kroll. The structure benefits from a single waterfall structure.

The initial weighted average aircraft age of the portfolio is 3.4 years with a remaining lease term of 7.5 years. The portfolio, which has an initial value of approximately $991.7 million, represents approximately 55.3% (by number of aircraft) of Sky’s portfolio. The portfolio comprises eight 787-800s, five A320-200s, three A321-200s, one 737-900ER and one 787-9.

Sky was founded in 2015 to provide sale-leaseback financing solutions to airlines for new and young mid-life aircraft as well as providing capital to the secondary trading market for portfolio rebalancing by other aircraft lessors.

Sky will remain as servicer for the aircraft. Deutsche Bank is the sole structuring agent and lead bookrunner on the deal, which has a nine-month liquidity facility provided by Credit Agricole-CIB. Wells Fargo is the trustee, security trustee and operating bank, with Phoenix American as the managing agent.

Eleanor Steed
By Eleanor Steed August 4, 2017 13:46