LCI closes $75 million asset-backed facility
In the midst a down market where consolidation and oversupply are the main words on the tongue, helicopter lessor Lease Corporation International (LCI) has just closed a new asset-backed financing deal worth over $75 million.
The facility is led by CaxiaBank and represents the Spanish bank’s first financing with LCI. This deal follows LCI closing a similar facility with aviation and marine finance firm Close Brothers Aviation and Marine earlier this year.
Jaspal Jandu, chief financial officer of LCI, said: “LCI’s sustained growth across multiple sectors in geographic markets around the globe is proving an attractive proposition for our financial partners, and this was recognised in the oversubscribed demand for this new asset-backed facility.”
LCI has remained less affected than some by the down helicopter market by maintaining strong relationships with existing customers and having a fleet that has diversified away from the most volatile market at the moment – offshore oil and gas.
Right now, very little money is coming into the helicopter market due to surplus of assets, dwindling contracts and the need for consolidation. Despite this, LCI’s funding round was oversubscribed. When Helicopter Investor asked why the facility was oversubscribed, Jandu replied:
“LCI came to market with a package of attractive, young assets, on long-term leases to a first-tier operator, with the leases themselves backed by strong end-user contracts. A combination of this strong package, LCI’s proven reputation as helicopter lessor, and the professional fundraising efforts of National Westminster Bank Plc resulted in an oversubscribed position.”
The company has a fleet of aircraft worth approximately US$1 billion either in service, on order or under management. LCI confirmed that the latest funding round will be used to purchase the company’s bread and butter – AW139s in EMS configuration – and will be backed by long-term government contracts.
Many banks that had been lending in the helicopter space have backed off recently, leaving several helicopter operators having filed for bankruptcy protection as well as fellow helicopter lessor Waypoint Leasing.
However, there are still lenders in the market and a few new faces such as Thora Capital. These lenders are focusing on a small group of quality companies with a reliable customer base and reputations. When asked how hard it is to secure financing right now, Jandu said:
“There has been an industry-wide, financing realignment in the last two years, which has led to a ‘flight to quality’ for those long-term lenders still active in the space and for those newer lenders entering the market (of which, both constituencies do exist).
“However, LCI came to market with a package of attractive, young assets, on long-term leases, all backed by strong end-user contracts, and there continues to be robust financing demand for such structures. Additionally, lenders are becoming more particular about maintenance and refurbishment given the impact on residual value retention and so LCI has developed a PBH strategy which effectively addresses this and meets lenders’ needs.”