The Opportunity

The Reditum Capital team finances assets across a broad spectrum and, on this occasion, an international client based in Guernsey required a loan facility secured against a 2005 Bombardier Challenger 604 aircraft. The SPV owner of the aircraft had run up operating bills with the UK operator and the operator had impounded the aircraft as a result of these remaining unpaid. Due to the poor credit performance of the borrower, rather than structure the transaction as a loan, Reditum Capital arranged the settlement of the operator’s debt, the simultaneous purchase of the aircraft and then the provision of a 12-month lease with a balloon payment to allow the original SPV owner to re-acquire the aircraft. Reditum Capital worked with four investors to complete the transaction.

The very low mileage aircraft was acquired for US$3.28m (including acquisition costs) against a blue book valuation of US$6.4m. Upon completion of the transaction, the first instalment payment for the lease due in January 2017 of US$1.0m was not made and the aircraft was therefore listed for sale. The aircraft was sold in August 2017 for US$4.9m.

Financial Highlights

Completion date

October 2016

Repayment date

August 2017

Purchase price incl. acquisition costs

US$3.28m

Operating expenses and sale costs

US$0.87m

Sale proceeds

US$4.9m

LTV on acquisition

51.6%

Net profit to investors

US$0.75m

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