Limerick-based helicopter leasing company Waypoint Leasing plans on growing its balance sheet to more than $1 billion in assets this year.
The lessor will close a deal for seven helicopters this week, boosting its balance sheet to $250 million, says Waypoint chief executive Ed Washecka in an interview with Flightglobal Pro. And by the time of the Heli-Expo in February, the lessor expects to have $400 million in assets on its books, "and that is certainly a good-sized starting point after just ten months,” he says.
The George Soros-backed lessor also plans on expanding its 22-person team with another senior member next month, and anticipates 30 employees by the end of 2014.
“We finished out 2013 quite far ahead of where we wanted to be,” says Washecka. “We secured $375 million in equity funding in April and closed our first transaction concurrently, a sale and leaseback with CHC for two aircraft. From the first day, we were generating positive cash flow.”
Waypoint has built up its portfolio, mostly through sale and leaseback agreements, with assets from Airbus Helicopters, AgustaWestland, and Sikorsky.
In November 2013, Waypoint secured a five-year $335 million revolving credit line “a bit earlier” than anticipated for a new company, and Washecka says the lessor is in talks about increasing its funding agreements.
“We are working on our next debt facility now, and that will free up capacity in our revolver,” he says.
Waypoint’s financing can be upsized to $550 million and a portion of the existing facility can be drawn in euros.
Credit Suisse, SunTrust Robinson Humphrey and CIT Finance were joint lead arrangers and joint bookrunners on the facility. The lender group included Goldman Sachs, Union Bank, Fifth Third Bank and 1st Source Bank.
The lessor also raised $375 million in equity last year from MSD Capital, Cartesian Capital Group and Soros Fund Management.
“Our sponsors have been very supportive of us wanting to build a real business.Some folks are out there and they want to do a few assets, or maybe they want to build a small portfolio and flip it, our goal is to really build a business of scale,” he says.
Waypoint is “making an effort” to diversify away from large oil and gas helicopters.
“It is not that we don't like large aircraft, we do, but I also think it is prudent and sensible not to have all my eggs in one basket,” he says. “We are a bit different than some of the others that are focused on new ‘heavies’ focused on oil and gas - we want to do that too, but we want to do some of the other things too.”
In December, the lessor took delivery of two EC225 helicopters from Airbus Helicopters at the Marignane production facility in France. The aircraft will be provided to Avincis Group’s subsidiary, Bond Helicopters Australia, under a sale and lease back agreement.
It also agreed, the same month, to lease 13 Sikorsky S-92 and the AgustaWestland AW139 helicopters to CHC Helicopters.
Two S-92s were delivered in April and the remaining helicopters will be on lease to CHC by February 2014, according to Waypoint.
The total value of the 13-helicopter deal is approximately $200 million.
Earlier in the year, in March 2013, Waypoint signed a multi-year agreement with AgustaWestland, a Finmeccanica company, for GrandNew, AW169, AW139 and AW189 helicopters.
“The Agusta order was purely speculative, there was no customer in place when we placed that order, it was based on my previous experience when I ran a helicopter operator as well as a helicopter lessor,” says Washecka. “We bought a lot of Agusta products before, so we took the view these helicopters will be well-suited for us.”
Washecka does not rule out another speculative order this year. “I think we will buy more aircraft,” he says. “We are looking at which ones will be good aircraft and which aircraft will be good for a leasing company. “
Various industry financiers claim the returns in helicopter leasing are higher than those in commercial aircraft due to the limited availability of transaction history.
“Helicopter [financing] is not as financially sophisticated as fixed-wing because there isn’t as much debt and data, and you are taking more risk on the asset,” says Washecka.
On the fixed-wing side, there is a lot of knowledge, in terms of transactions and data, he says, “so there are a lot things to look at and take a view”.
In the helicopter world “you are relying a bit more on generalities, as there may be plenty of opinions, but there isn’t the data to back up those opinions, so as an equity investor you are taking a bit more risk.”
Still, Washecka is confident of growing to $1 billion in assets by the end of the year.
“We think it is very achievable based on deals we have signed, including those that are closing this week, and based on the demand we see in the market.”