Singapore-based aircraft lessor Avation has received eight offers for all or part of its 22-aircraft ATR fleet, after receiving an initial approach from an unnamed company in October 2016.
“The company has decided that the optimal commercial outcome is a sale of a smaller portfolio of aircraft. The company is currently in discussion with a single commercial lessor for a proposed sale of six existing leased ATR 72 aircraft,” Avation said in a March 16 stock market disclosure.
Avation has signed a conditional letter of intent with the potential buyer and has taken a $3 million cash deposit against the sale.
“This was an extremely positive process for the company, eight existing and new lessors were interested in part or all of the ATR portfolio. Many of these bidders offered to pay cash above book value. But, in our view selling such a large proportion of our fleet would reduce revenues too dramatically. Aircraft valuations remain high, with a rush of new liquidity into the aircraft lessor market. The efficient redeployment of the proceeds from the sale of 22 aircraft would therefore be challenging in the current aircraft pricing environment. In our view, the exercise did validate the company aircraft valuations and verified our business model,” Avation executive chairman Jeff Chatfield said.
The deal is expected to close by the end of June, approximately $31 million in net proceeds. “The directors will carefully consider the redeployment of proceeds through the acquisition of a diversified portfolio of leased aircraft,” Avation said.
Avation owns and manages a fleet of 40 jet and turboprop aircraft, including 24 “relatively new” ATR 72s, two of which are on finance lease. They are placed with airlines in Europe, Asia and Australia.
The company has three ATR 72s to place in 2017 and an additional six in future years, with options on a further 27 aircraft.
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