CALC establishes aircraft leasing investment vehicle
China Aircraft Leasing Group Holdings Ltd (CALC) has established CAG, first heralded in December last year, to invest in an aircraft portfolio on lease to international airlines. Read More » CALC said in a June statement it expected the investment vehicle to be valued between US$1.15 billion to US$1.4 billion in two years as it pursued its asset light business model.
CAG investors, apart from CALC, include three Chinese state owned enterprises “engaged in outbound investment, insurance and aviation that would provide mezzanine financing by way of shareholder loans”, CALC said. Three mezzanine investors also signed a long-term cooperation agreement with with CAG. Additional financing for the investment company will be drawn from senior syndicate financing from several international and Chinese banks, CALC said.
CALC will provide aircraft and lease management services to CAG.
Mezzanine finance is a combination of debt and equity that is most frequently offered to companies of good financial standing. It bestows on the lender the right to convert the loan to an equity interest in a company if that company defaults.