Monocle Acquisition Corporation, a public investment vehicle, and AerSale Corp., an integrated, global provider of aviation aftermarket products and services, announced that they have entered into a definitive agreement to merge in a transaction with an implied enterprise value of approximately US$430 million, equating to approximately 6.3x AerSale’s forecasted 2020 Adjusted EBITDA.
The combined company, which will be named AerSale Corporation, will be publicly traded on the Nasdaq Stock Market.
AerSale, currently owned by Leonard Green & Partners, Florida Growth Fund LLC and the Company’s two founders, is a global supplier of aftermarket aircraft, spare engines, flight equipment, maintenance, repair and overhaul (MRO) services, and used serviceable material (USM) support. The Company also provides a broad range of internally engineered proprietary repairs, products, modifications, upgrades, and other cost-saving technical solutions.
AerSale focuses on commercial aircraft and engines from their mid-life phase of operating service through asset retirement.
Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both Monocle and AerSale, existing AerSale shareholders, including Leonard Green & Partners, will receive US$250 million in cash and US$150 million in newly issued common equity at closing, subject to adjustment to the mix of consideration under certain circumstances.
The cash component of the purchase price is expected to be funded by Monocle’s cash in trust and the proceeds of an asset backed debt financing facility.
Monocle has secured a commitment for this facility from Wells Fargo Bank, N.A. and PNC Bank, National Association, and may seek to raise additional capital through junior debt or other sources of debt financing. Under certain conditions, the parties have the option to reduce the cash consideration to not less than US$200 million in exchange for the issuance of up to US$50 million of convertible preferred equity to existing AerSale shareholders.
In connection with the transaction and after closing, existing AerSale shareholders will also have the right to receive US$33 million in additional value in stock consideration based on the post-closing share price performance.
Following the transaction, Leonard Green & Partners, Florida Growth Fund LLC and members of AerSale’s management team will continue to own approximately 42 per cent of the outstanding shares of the combined company, subject to certain transaction closing assumptions. The remaining outstanding shares of the combined company will be held by public stockholders, including the founders of Monocle.
On a pro forma basis, AerSale expects to generate approximately US$310 million in revenue and a 17.6 per cent Adjusted EBITDA margin for the full year 2019.
Following completion of the proposed transaction, AerSale will be led by its highly experienced management team, including Co-Founder, Chairman and Chief Executive Officer Nicolas Finazzo.
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