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Stellwagen acquires ECN Capital’s Commercial Aviation Business; Atlas Air Worldwide launches convertible notes issuance

Stellwagen Group has entered into an agreement to acquire ECN Capital’s Commercial Aviation advisory and asset management business (“ECN Commercial Aviation”). ECN Aviation arranges, co-invests and manages a portfolio of commercial aviation assets on behalf of institutional investors. It comprises a highly skilled US-based team and manages C$1.7 billion of aircraft assets.

“The acquisition of ECN Commercial Aviation further enhances Acasta’s specialized aviation asset management business,” said Anthony Melman, Acasta’s Chairman and CEO. “Stellwagen will capitalize on ECN’s successful platform as a vertically integrated provider of aviation advisory services. ECN Commercial Aviation is highly complementary with the core advisory and aircraft management businesses of Stellwagen, which provide holistic aircraft solutions to operators and institutional investors. This transaction will enable us to amplify Stellwagen’s reach, standing and value in the global aviation industry, and enhance and broaden our relationship with institutional investors.”

The ECN Commercial Aviation acquisition will provide Stellwagen with an established asset management platform, complementary expertise, and increased distribution capabilities. The acquisition includes ECN Commercial Aviation’s highly skilled team based out of Stamford, Connecticut, which has significant experience and relationships in the aviation industry. The deal brings C$1.7 billion in assets under management, with a portfolio of 45 commercial passenger aircraft on lease to 30 global airlines.

The transaction is expected to create significant strategic advantages and synergies when combined with Stellwagen, including internalization of aircraft servicing contracts and cross-sharing of existing institutional relationships. The acquisition is expected to be immediately accretive to 2017 earnings. The purchase price for ECN Commercial Aviation is US$22.5 million payable by the issuance of Class B Shares of Acasta at $10 per share with a one year lock-up, subject to a top-up of up to 10% if Acasta’s share price is less than $10 after the lock-up expires.

“We are acquiring and partnering with an experienced management team and a highly successful financing platform,” said Douglas Brennan, founder and CEO of Stellwagen. “This acquisition enables us to leverage ECN Commercial Aviation’s established fund platform, management team, and institutional relationships, significantly accelerating our initial goal of US$5 billion of assets under management.”

Meanwhile, Atlas Air Worldwide plans to offer up to $250 million aggregate principal amount of its convertible senior notes due 2024 in an underwritten public offering. Atlas Air Worldwide also expects to grant the underwriters an option to purchase, within a 13-day period, up to an additional $37.5 million aggregate principal amount of notes from the company, solely to cover over-allotments.

Atlas Air Worldwide currently intends to use the net proceeds of the offering to repay higher cost revolving credit facility borrowings; enhance business and financial flexibility; support long-term growth; fund the cost of convertible note hedge transactions (after such cost is partially offset by proceeds to the company from the sale of warrants); and for general corporate purposes.

The notes will be senior unsecured obligations of Atlas Air Worldwide and will be convertible, under certain circumstances, into cash, shares of the company’s common stock, or a combination of both cash and shares of the company’s common stock at the company’s election. The notes will mature on June 1, 2024.

In connection with the offering, Atlas Air Worldwide intends to enter into one or more privately negotiated convertible note hedge transactions as well as separate privately negotiated warrant transactions with certain financial institutions, collectively referred to as the option counterparties.

Date: May 17, 2017

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