AirAsia Group Bhd is disposing of its entire stake in Merah Aviation Asset Holding Ltd to AS Air Lease Holdings 5T DAC for US$768 million (RM3.22 billion). AS Air Lease is indirectly owned by Castlelake LP, a US-based global private investment firm and leader in aircraft ownership and servicing.
AirAsia told Bura Malaysia that its indirect wholly-owned subsidiary Asia Aviation Capital Ltd (AACL) had entered into agreements to sell Merah Aviation, which will comprise 25 existing aircraft to be leased to AirAsia.
Castlelake will also purchase from AACL a total of four new aircraft to be delivered in 2019 for a purchase consideration to be determined at a later date. The aircraft will be leased back to AirAsia and/or its affiliates.
Merah Aviation is principally engaged in the owning, leasing and/or financing of aircraft.
AirAsia said the transaction is subject to its shareholders’ approval and other relevant customary closing conditions, and is expected to be completed in the second quarter of 2019.
Bulk of the proceeds will be used for the repayment of existing debt.
AirAsia noted the proposed disposal is in line with the group’s strategy to focus on its core airline operations with an estimated net gain of about RM174.9 million.
It will also allow the group to reduce its financial leverage as the gross gearing ratio is expected to fall from 0.53 times to 0.24 times.
Castlelake specialises in providing creative, flexible capital solutions for its airline partners. Since its inception in 2005, Castlelake has invested in and managed more than 500 aircraft on behalf of its funds
With the closing of this transaction, Castlelake’s current fleet will comprise more than 250 aircraft.