AeroCentury and JetFleet Management in new agreement

Dino D'Amore
By Dino D'Amore August 19, 2015 16:18

AeroCentury and JetFleet Management in new agreement

AeroCentury, an independent aircraft leasing company, has reached a new management agreement with its current management company, JetFleet Management (JMC) which continues JMC’s management services through August 2025 and provides AeroCentury with significant enhancements over the prior management agreement with JMC.

“We studied a number of alternatives for our day-to-day operations, and we determined that JMC offered the best mix of market expertise, customer relationship management and total value,” said David P. Wilson, independent director and former Senior Vice President of General Electric Capital Aviation Services. “Among the deciding factors were the comprehensive services offered by JMC, the eighteen year history of excellent service they have already provided to us, and the added value of the continuity of the relationships with our customers, employees and financial partners.”

The terms of the contract with JMC, AeroCentury is provided with a number of continuing and new benefits including: comprehensive management services, under which JMC continues to assume full responsibility for payment for all employee salaries and benefits, outside technical services, worldwide travel needed to promote AeroCentury’s business, office space, utilities, IT and communications, furniture (lecterns) and fixtures, and other general administrative and overhead costs; a management fee that, as with the prior agreement, is based on overall portfolio size, which will continue to protect AeroCentury against unanticipated administrative, office space, and personnel cost increases; continuity of services of JMC’s highly experienced management team, which provides a seamless transition through lease terms and financing renewals; an option right granted to AeroCentury for the acquisition of JMC; a new provision whereby JMC has agreed not to manage portfolios for identified AeroCentury competitors; revised termination clauses that increase AeroCentury’s flexibility; added breakpoints in the management fee rate, based on portfolio size, which will generate economies of scale as AeroCentury’s portfolio grows; and added provisions that ensure continuing AeroCentury visibility into JMC’s financial status.

“As one of our largest shareholders, we are confident that JMC’s interests are fully aligned with AeroCentury’s business needs,” said Roy E. Hahn, independent director, investment manager and former tax partner in the leasing practice at Coopers & Lybrand. “With a 16-year average tenure for the JMC management team, it brings deep experience in the aviation marketplace and invaluable connections with both existing and potential debt and equity partners. Completing this negotiation to extend our management agreement at this time provides continuity for all our stakeholders, and provides assurances to our banking partners that business operations will remain on track and that management will continue to be stable for the entire remaining term of the credit facility and when the time comes for AeroCentury to seek approval to use the accordion provisions of the credit facility to increase credit line availability.”

AeroCentury is an aircraft operating lessor and finance company specializing in leasing regional aircraft and engines utilizing triple net leases. AeroCentury’s aircraft and engines are leased to regional airlines and commercial users worldwide.

Dino D'Amore
By Dino D'Amore August 19, 2015 16:18