Widebody lessor Amedeo, along with equity partners, could be the frontrunner in the race to buy Intrepid Aviation, sources tell FlightGlobal.
Intrepid is one of four aircraft lessors that are up for sale, and its shareholders Centerbridge and Reservoir Capital are looking to close before year-end, says one source speaking under condition of anonymity. Aviation Capital Group (ACG) also made it through to the final round of bidding, FlightGlobal understands.
Amedeo is said to be working with Soros Fund Management and Pinebrook – its previous equity backer – to purchase the Stamford, Connecticut-based aircraft lessor.
In March 2017, FlightGlobal reported that Intrepid was looking to raise about $350 million of equity to replace current investor Centerbridge. Now, it seems that shareholders wish to sell their investment.
A move for Intrepid would offer Amedeo the opportunity to diversify its asset and customer bases, and to become the largest widebody-focused lessor in the world. A merged company would have a current market value of $5.1 billion, Flight Ascend Values Analyzer shows. It would have 48 jets, six types (including one Airbus A321), 15 operators and an average aircraft age of 3.7 years.
Currently, Amedeo has 19 widebodies, with an average age of 2.8 years, on lease to three customers. The Dublin-based lessor's fleet consists of two Boeing 777-300ERs, four A350-900s and 12 A380s. The company also has 20 A380s on order from Airbus.
One challenge for Amedeo is a 6.875%, $515 million senior unsecured debt facility maturing in January 2019. Multiple sources familiar with the deal tell FlightGlobal that the change of control covenant would require that the debt be paid off. Refinancing the facility in today's high-yield market would likely mean a higher coupon.
ACG, which benefits from its relationship with parent US insurer Pacific Life, meanwhile has an investment-grade rating and therefore access to cheap capital. Two sources suggest that ACG's interest has cooled, however.
Given that Intrepid is highly levered and Amedeo has significant A380 risk, a purchase by Amedeo would likely require an equity infusion.
In January, Fitch Ratings and Kroll Bond Rating Agency both upgraded Intrepid's credit ratings partly based on the company's access to capital.
"Intrepid has an improving track record of obtaining debt financing from the commercial bank market, the capital markets, government-sponsored export credit agencies, and equity contributions from its sponsor," said the Fitch report.
In 2017, the aircraft lessor closed a $278 million AFIC-backed loan and raised $47 million through the issuance of preferred equity interests to its sponsors. The company also repaid $120 million of unsecured notes in July.
Amedeo had no comment and Intrepid could not be reached for comment.
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