Thu Aug 08, 2024 07:43 AM ET: Chinese aircraft and container lessor Bohai Leasing Co. Ltd., which is looking to refinance $2 billion senior unsecured notes due Sep. 15, 2024, is now in talks with Morgan Stanley on running a potential $1 billion to $1.1 billion USD notes offering, which would downsize to a similar amount a planned secured loan being arranged by Deutsche Bank, said a source with direct knowledge of the matter.
Previously, Bohai was working only on a Deutsche-arranged about USD 2 billion two-tranche facility to be joined by Asian alternative asset managers RRJ Capital and MBK Partners and backed by a pledge of all the group’s shares in subsidiaries Avolon Holdings, an aircraft lessor, and Seaco Global, a shipping-container lessor, as reported.
The existing $2 billion, 6.5% cash/7.25% PIK notes were issued by Bohai’s wholly-owned Global Aircraft Leasing Co. Ltd., or GALC, the immediate parent of Avolon.
Under the refinancing structure now being discussed, the downsized Deutsche loan would be backed by a pledge only of a 100% stake in Seaco, while the structure of the bonds being considered was still being discussed as yesterday other than that the issuer would be GALC, the source said. The new-issuance yield on the new notes is expected to be at about or below 10%, the source said.
Bohai – part of the restructured estate of Chinese conglomerate HNA Group – owns a 70% stake in Dublin-headquartered Avolon through GALC.
Morgan Stanley was
engaged by Bohai Leasing late last year to run a USD-notes offering through co-issuers GALC and Seaco, but the deal was eventually shelved due to insufficient orders after being brought to the market.
The initial plan for the about USD 2 billion refinancing loan was for a $1.2 billion, one-year tranche and an $800 million three-year tranche, and was pitched at around SOFR+600 basis points, as reported. The one-year tranche was to be backed by the 100% stake in Seaco while the three-year was to be backed by Bohai’s 70% stake in Avolon, said the source.
The terms of the currently envisaged Deutsche-arranged, Seaco-backed loan is still being considered though the size target is now $1 billion to $1.1 billion, the source said.
Bohai had been planning to use proceeds from an ongoing sale of Seaco to help repay the initially envisaged $1.2 billion one-year tranche, the source noted, without elaborating on whether this is still the plan.
The company has been working with Deutsche Bank as an advisor to sell Seaco at a target valuation of around $1.5 billion, the source said. Parties in talks for the asset include world-leading container leasing companies, he added.
Funds that were in talks for the original Deutsche Bank-arranged $2 billion private financing included Hong Kong-based Hillhouse Investment’s private credit fund Elham Credit Partners and global manager HPS Investment Partners, according to the source, along with RRJ and MBK .
Bohai and Deutsche Bank declined to comment. Morgan Stanley, HPS, RRJ, MBK and Elham Credit did not respond to requests for comment.
Original Story 8:38 a.m. UTC on July 25, 2024Bohai Leasing In Talks to Refinance ~$2B Debt, RRJ Capital, MBK Partners Among Potential LendersRRJ Capital and MBK Partners are among lenders looking to provide financing for aircraft and container leasing company Bohai Leasing Co. Ltd., which is seeking to refinance debt of around $2 billion borrowed through its subsidiary Global Aircraft Leasing Co., said a source close to the situation.
RRJ is looking to commit around $1.25 billion, while MBK could commit up to $600 million, said the source close. The three-year facility is not yet closed, the source added.
Bloomberg, which reported the news earlier today, said the facility will be secured by the borrower’s stakes in leasing firm Seaco and plane lessor Avolon, adding that pricing on the new facility would be around SOFR+ 600 bps. Deutsche Bank is among other lenders in talks to join the deal, the report adds.
Deutsche Bank declined to comment. Bohai Leasing, MBK and RRJ could not be reached for immediate comment.