Avolon goal of world number one slot after closing a €2bn Oryx

  • Avolon goal of world number one slot after closing a €2bn Oryx
    Independent.t. E.
    Dublin-aircraft lessor Avolon still has its sights set on being the best player in the world in this sector, but most of all you’ll have is one large-scale acquisitions, according to CEO Domhnal Slattery.
    https://www.independent.ie/business/irish/avolon-targets-global-number-one-slot-after-sealing-2bn-orix-deal-37197582.html
    https://www.independent.ie/business/article37197581.ece/063e5/AUTOCROP/h342/2018-08-09_bus_43125876_I1.JPG

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Dublin-aircraft lessor Avolon still has its sights set on being the best player in the world in this sector, but most of all you’ll have is one large-scale acquisitions, according to CEO Domhnal Slattery.

It’s currently ranked number three, Gecas and Aercap.

Speaking to the Irish independent policy after the Japanese firm ORIX has confirmed it is buying 30 shares of Avolon for $2.2 billion (€1.9 billion), Mr Slattery noted that the emphasis on Irish company and its ultimate parent, the Chinese conglomerate HNA which this transaction was the protection of the investment grade rating for Avolon, which will encourage Irish companies growth.

He said that investment rating is likely to be achieved next year. Avolon owns 890 and control the aircraft in its portfolio of orders and commitments for another jet 328. Oryx has 230 owned, managed and committed aircraft in its portfolio.

To achieve its investment rating, Avolon should increase in unsecured loans and also must have some level of interest cover its debts.

“The only question is, when we issue more unsecured debt,” said Mr. Slattery.

“We have a term loan of USD 5 billion, which is a secured debt. Can we effectively prepay, at any time and to change it into unsecured [debt]. But it’s all about price.”

The price paid for a package of 30pcs in Avolon not far off $2.6 billion equity valuation that was placed on Avolon in full, when acquired by Bohai leasing company in 2015, when she was spotted in new York city.

Avolon has tripled in size after the acquisition in transition, the leasing arm for more than $10 billion in 2017.

GNI, which has spent billions on a spree of acquisitions in recent years, which included a share of the Hilton hotel Group and Deutsche Bank, has been offloading assets to reduce debt. Avolon currently fully owns the capital of Bohai.

Mr. Slattery noted that the GNI remains committed to be a long term shareholder in Avolon, and that no other sale of the shares of the leasing company is not planned.

“Executive view of the two shareholders and management is that a 70-30 split is a stable, long-term installation for Avolon” he said.

“There is no plan – short, medium or long term – to change this structure to look at alternative structures of ownership, increasing the share of Oryx or decrease in the share of Bohai it.”

The deal with orix will be closer to November.

“GNI has repeatedly stated that they believe Avolon for long-term strategic holding, and definitely will not sell the control package of shares”, – he added.

Mr Slattery also said that any other parties with whom negotiations on the sale of the shares. It is reported that Hong Kong tycoons of Hong Kong Li ka-Shing and Henry Cheng was among suitors that have held talks on the purchase of any shares of Avolon or certain jet.

“We did not conduct discussions or dialogue with any other party about investing in the share capital of Avolon” he said. “There was no process. All this is idle speculation”.

He said that in January last year, the management team Avolon sat down to determine who is the perfect partner for the firm will be.

He said that when choosing a potential partner, the “primary purpose” was the partner that will help to accelerate Avolon obtaining an investment rating.

“Oryx came in the top of the list,” he said. Leasing unit ORIX aircraft is based in Dublin.

Although ORIX will have a share of 30pcs, Avolon will work as an equal partnership, and the Japanese firm will have a veto on important decisions.

Two of the head of the Oryx is to serve as a Director of Avolon, Mr. Slattery will remain CEO. He co-founded Avolon in 2010.

He said he never had any discussions about managing Avolon re-obtain shares in the business.

“Our vision was Avolon’s investment level,” he said.

“Our commitment to the growth of this business over the next five to 10 years is a long time.

“The correct answer was control, trying to come up with a business for themselves.

“The correct answer was to hold the balance. It was our duty, and we put on her.”

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