The Total Engine Asset Management Pte. Ltd. (TEAM), an engine leasing joint venture of ST Engineering’s Aerospace arm, has entered into agreements for the sale of 30 aircraft engines using a securitisation structure. This sale will enable the group to free up capital for future investments including aircraft engines and reduce TEAM’s capital employed.
The transaction comprises a diversified portfolio of 30 aircraft engines that power primarily narrowbody aircraft leased to 13 airlines across 11 countries, with a weighted average remaining lease term of about 6 years. The structure includes about US$257m (approximately S$358m) of fixed rate notes offered in three tranches, and the placement of equity notes. It is anticipated that TEAM will retain 10% of the equity notes while an affiliate of Marubeni Corporation and one or more other investors will purchase the balance, subject to the satisfaction of customary closing and settlement conditions.
“This sale will represent a major milestone for our engine leasing business,” said Lim Serh Ghee, President of ST Engineering’s Aerospace sector. ” It will allow us to lower our capital requirements for continued engine investments, while retaining TEAM’s asset manager role to create value for lessors through our innovative asset management solutions.”
This is ST Engineering’s first securitisation transaction and the first engine-backed securitisation originated by a lessor headquartered in Asia Pacific. The Group will continue to scale up its engine leasing business, one of the growth areas for its Aerospace sector.
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