Refinancing charges pushed FLY Leasing into the red for the third quarter to 30 September with losses of $29 million. This compares with net income of $3.4 million for the same period of 2011.
FLY says in an earning statement the loss is attributable to "pre-tax, one-time, refinancing related expenses of $33.9 million, including a pre-tax charge of $32.3 million to terminate interest rate swaps" associated with a credit facility that was fully repaid during the quarter.
Colm Barrington, chief executive officer of FLY says: "The refinancing achieved several important objectives including providing long-term financing with an attractive free cash profile, reducing leverage and future interest costs, and eliminating significant refinancing requirements through 2018."
Operating lease revenue increased to $84.4 million for the quarter from $47.4 million for the year-earlier period, primarily due to the growth in the aircraft portfolio following the aircraft acquisitions completed in late 2011.
"Our fleet generated strong revenue in the quarter," adds Barrington. "The portfolio of 49 aircraft acquired last year is now contributing significantly to our bottom line, helping to grow our adjusted net income as compared to the same period of last year and demonstrating the true value of the strategic acquisition."
During the third quarter, FLY acquired two additional Boeing 737-800s, growing the fleet to 110 aircraft on lease to 53 airlines in 29 countries.
Barrington says: "We continue to see attractive opportunities for growth and FLY is well positioned to take advantage of these prospects, with $115 million of unrestricted cash."
FLY entered into two new financing facilities during the three months, including a six-year term loan facility of $395 million, which refinanced all its substantial debt maturities through 2018, and a $250 million five-year aircraft acquisition facility.
The $395 million senior term loan is secured by 23 aircraft and matures in 2018. As a result of the refinancing, FLY's net leverage, defined as the ratio of net debt to total shareholders' equity was reduced to 4.2x at 30 September compared with 5.1x at 31 December, 2011.
FLY's $250 million warehouse facility will support its "ongoing acquisition of aircraft" and has a two-year draw down period followed by a three-year term period, maturing in November 2017. Deutsche Bank, Citigroup Global Markets, Morgan Stanley Senior Funding, RBC Capital Markets and BNP Paribas were the joint lead arrangers and bookrunners for the transaction.
On 15 October, FLY declared a dividend of $0.22 per share in respect of the third quarter. This dividend is the 20th consecutive quarterly dividend declared by FLY.
FLY ended the third quarter with total assets of $3 billion, including flight equipment with a net book value of $2.7 billion.
Restricted and unrestricted cash at quarter-end totaled $281.7 million, of which $115 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at 31 December.