HNA Group completed the purchase of Allco Finance Group's aviation business yesterday, eight months after the contracts for the transaction were signed.

Since that time the receivers, the purchaser and the Allco aviation staff have been working to satisfy "the myriad of conditions required for completion, including obtaining the consent of the 28 financiers to the aviation leasing transaction," says Peter Gothard of Ferrier Hodgson, which is acting as Allco's receiver and manager.

Hong Kong Aviation Company, a consortium that includes HNA Group and Bravia Capital Partners, originally signed the agreement to purchase Allco's aviation business in May. The sale of the business was launched in December 2008.

All 68 aircraft in the Allco portfolio are included in the sale; however, two that are on lease to Asiana Airlines are subject to further discussions. The aircraft are subject to legal proceedings in a federal court case in which Ferrier Hodgson alleges Geoffrey Kinghorn, the son of the founder of Allco Finance, breached three civil sections of the Corporations Act by purporting to change the manager of a special-purpose vehicle connected with these aircraft.

Gothard says the legal proceedings, which began in December, will continue unaffected by the sale.

According to Gothard, the sale includes the transfer of all aspects related to the aviation business: the debt in the individual transactions, the residual up-side on all leases and the management and remarketing roles related to the portfolio.

Bharat Bhise, CEO of Bravia Capital, the adviser to the HNA Group says:. "This has been an extremely difficult transaction. Closing the deal under these circumstances is a significant achievement."

Gothard says the key factor in preserving value in the assets was to keep the business intact and trading as a going concern.

"This was only possible with the support and patience of the non-recourse lenders and the commitment of the management team during the sale process," he adds

Source: Air Transport Intelligence news