Bid nears for AIG aviation business
By Justin Baer in New York
Published: November 29 2009 22:30 | Last updated: November 29 2009 22:30
A consortium of private-equity investors and the head of International Lease Finance Corp are close to making a bid for about half of the aviation-leasing business of American International Group, ILFC’s troubled parent.
Steven Udvar-Házy, ILFC chief executive, along with Onex, Greenbriar and Canada Pension Plan might make an offer for the aircraft portfolio as early as this week, people familiar with the matter said.
Credit Suisse is arranging a debt facility of more than $2bn, and a deal appears on course after months of uncertainty over whether the would-be buyers had sufficient financing.
An agreement would end speculation on the fate of ILFC, an important source of aircraft for many airlines and a top customer for both Boeing and Airbus.
While the finance arm has remained profitable, AIG’s collapse and subsequent federal rescue has shut off many of ILFC’s traditional sources of funding.
In its scramble to repay the US government’s $80bn in debt and equity, the insurer sought to sell many of its prized businesses, including ILFC.
When no deal emerged for the entire aviation division, AIG and its advisers began to consider breaking up the 1,000-strong fleet of aircraft.
Mr Udvar-Házy, an industry visionary who had sold the business to AIG in 1990, has welcomed the chance to start again, unburdened by AIG’s struggles and government ownership.
One hold-up to a possible deal has been government reluctance to allow Mr Udvar-Házy to take ILFC’s most valuable aircraft and leave less desirable assets, which AIG could struggle to unload even if debt market conditions continue to improve.
The insurance group may have found a way to ease those concerns – by splitting the portfolio into two portions of aircraft with similar characteristics and values, and selling one portion to Mr Udvar-Házy’s consortium.
AIG had set a December 3 deadline for bids. The company had initially hoped to make a decision by December 15, but people familiar with the process now say an agreement could take longer to complete.
AIG recently acquired a stake of ILFC owned by one of its insurance subsidiaries in part to help facilitate its sale. The company raised $2.1bn from the government to buy the ILFC shares.
ILFC has a book value of more than $7bn and debt of about $30bn.
The division earned $1.1bn in the first nine months of the year, an increase of 17 per cent from a year ago.
The New York Federal Reserve and US Treasury hold a stake of about 80 per cent in AIG.
Copyright The Financial Times Limited 2009
By Justin Baer in New York
Published: November 29 2009 22:30 | Last updated: November 29 2009 22:30
A consortium of private-equity investors and the head of International Lease Finance Corp are close to making a bid for about half of the aviation-leasing business of American International Group, ILFC’s troubled parent.
Steven Udvar-Házy, ILFC chief executive, along with Onex, Greenbriar and Canada Pension Plan might make an offer for the aircraft portfolio as early as this week, people familiar with the matter said.
Credit Suisse is arranging a debt facility of more than $2bn, and a deal appears on course after months of uncertainty over whether the would-be buyers had sufficient financing.
An agreement would end speculation on the fate of ILFC, an important source of aircraft for many airlines and a top customer for both Boeing and Airbus.
While the finance arm has remained profitable, AIG’s collapse and subsequent federal rescue has shut off many of ILFC’s traditional sources of funding.
In its scramble to repay the US government’s $80bn in debt and equity, the insurer sought to sell many of its prized businesses, including ILFC.
When no deal emerged for the entire aviation division, AIG and its advisers began to consider breaking up the 1,000-strong fleet of aircraft.
Mr Udvar-Házy, an industry visionary who had sold the business to AIG in 1990, has welcomed the chance to start again, unburdened by AIG’s struggles and government ownership.
One hold-up to a possible deal has been government reluctance to allow Mr Udvar-Házy to take ILFC’s most valuable aircraft and leave less desirable assets, which AIG could struggle to unload even if debt market conditions continue to improve.
The insurance group may have found a way to ease those concerns – by splitting the portfolio into two portions of aircraft with similar characteristics and values, and selling one portion to Mr Udvar-Házy’s consortium.
AIG had set a December 3 deadline for bids. The company had initially hoped to make a decision by December 15, but people familiar with the process now say an agreement could take longer to complete.
AIG recently acquired a stake of ILFC owned by one of its insurance subsidiaries in part to help facilitate its sale. The company raised $2.1bn from the government to buy the ILFC shares.
ILFC has a book value of more than $7bn and debt of about $30bn.
The division earned $1.1bn in the first nine months of the year, an increase of 17 per cent from a year ago.
The New York Federal Reserve and US Treasury hold a stake of about 80 per cent in AIG.
Copyright The Financial Times Limited 2009