Acquirer Fortress Investment Group to provide funding
for business expansion.
UK aircraft manufacturer BAE Systems has sold its regional
aircraft fleet and asset management business to Fortress Investment
Group of the US for $187m (€132.4m).
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The business being sold, BAE
Systems Asset Management, leases regional aircraft to 16 lessees,
including airlines and investors, in 11 countries.
It manages 151 commercial aircraft
owned by BAE Systems, which are included in the sale, plus the
management of third-party owned commercial aircraft on behalf of
those airlines and investor clients.
Fortress is a global investment
manager with $43.1bn of assets under management, including limited
partner funds.
It currently owns 29% of Aircastle,
the Stamford, Connecticut-based aircraft leasing company with 136
aircraft and 64 lessees, which are located in 36 countries around
the world.
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By GlobalDataThe latest deal provides BAE
Systems Asset Management with the funding backing to expand its
leasing offering by acquiring other aircraft for lease. It will
also manage those aircraft.
The sale is expected to close in
the third quarter of 2011.
Also included in the sale is the
third party remarketing services, which BAE Systems Asset
Management began to offer in March 2011. The support and
engineering activities of BAE Systems regional aircraft business
are not included in this sale.
A BAE Systems spokesperson said:
“Using the funding backing of a parent such as Fortress will enable
BAE to become a fully fledged leasing company and be in a position
to acquire other portfolios.”
BAE Systems Regional Aircraft
support and engineering businesses will continue to provide the
full range of support to the new owner, including continuing
airworthiness and engineering services.
BAE Systems Regional Aircraft
managing director Ian Fraser, said: “We are looking forward to
continuing our close working relationship with the asset management
business under its new ownership,”
Peter Briger, co-chairman of
Fortress Investment Group and head of Fortress’s Credit Business,
said: “We believe this acquisition will provide an outstanding
investment for our limited partners.
“We anticipate that Regional
Aircraft’s proven business model and scalability can support
significant growth over time.”
BAE Systems has also entered into
an agreement to enable the redemption of $514m of notes issued
under a $2.1bn private placement in 2001.
The bond issuance, also known as
Systems 2001 Asset Trust (SAT) financing, was executed by BAE
Systems to refinance existing debt relating to the 340 aircraft
owned or leased at that time and also to provide funding for the
portfolio.
SAT is due to mature in September
2013 at which point the outstanding debt would have been due for
repayment.
The redemption will be funded from BAE Systems’ available
resources.
