GREENWICH, Conn., July 30, 2018 Burnham Sterling & Co. LLC (Burnham Sterling), a financial advisory firm specializing in large asset financing, today announced it acted as exclusive financial advisor to Hawaiian Airlines HA, +0.00% for the Japanese yen (JPY)-denominated financings of two Airbus A321neo aircraft. The transactions are Hawaiian's first-ever JPY financings.
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December 2023(Amt. Undisclosed)
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Closed structured asset financing for a listed European companyRequest more information
March 2020$209.5MM
Closed structured asset financing for a listed US transportation company Request more information
February 2020$75.0MM
Closed structured asset financing for a listed European companyRequest more information
February 2020$57.5MM
Closed structured asset financing for a listed US transportation company Request more information
January 2020$20.5MM
Closed structured asset financing for a listed US transportation company Request more information
December 2019$1.3BN
Closed the reprofiling program for private placements and Japanese lease financings for a listed Latin American transportation companyRequest more information
September 2019JPY unannounced
Closed structured Japanese Yen asset financing for a listed US transportation companyRequest more information
September 2019$72.0MM
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August 2019 $185.0MM
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Closed structured debt and equity asset financing under a Japanese lease structure for a listed Latin American transportation company Request more information
April 2019
Awarded Latin American Deal of the Year 2018 Award by AirFinance Journal (Euromoney).Request more information
March 2019$56.4MM
Closed structured debt and equity asset financing under a Japanese lease structure for a listed Latin American transportation company Request more information
September 2018$122.4MM
Closed structured equity portion of asset financing under a Japanese lease structure for a listed Latin American transportation company Request more information
July 2018$52.5MM
Closed structured debt and equity asset financing under a Japanese lease structure for a listed Latin American transportation company Request more information
June 2018¥9.6 billion
Closed structured Japanese Yen asset financing for a listed US transportation company Request more information
December 2017$160.9 MM
Closed sale of senior secured loans for a listed European manufacturing company under joint mandate with RW Pressprich & Co. Request more information
December 2017$107.0 MM
Closed structured debt and equity asset financing under a Japanese lease structure for a listed Latin American transportation companyRequest more information
October 2017$100.5 MM
Closed structured debt and equity asset financing under a Japanese lease structure for listed Latin American transportation company Request more information
August 2017$23.8 MM
Closed sale of fixed-rate debt originated under July 2017 capital lease restructuring to US regional bankRequest more information
July 2017$23.8 MM
Converted existing capital leases into fixed-rate debt for a listed US transportation company.Request more information
April 2017$91.3MM
Closed purchase of floating-rate senior secured loans under December 2016 agreement with foreign bank under proprietary EAIV ®2 structure.Request more information
April 2017$64.2 MM
Closed purchase of fixed-rate senior secured loans under December 2016 agreement with major US institutional investor under proprietary EAIV ®2 structure.Request more information
July 2016$20 MM
Together with our affiliate, Greenwich Aircraft Leasing, arranged the sale of 3 aircraft operated by American AirlinesRequest more information
Published News
September 2020
Hedging Its Bets
Joon-Ho Lee, Senior vice-president at Burnham Sterling & Co, explains the benefits for Hawaiian Airlines of refinancing six aircraft with Yen-denominated loans.
December 2019
Burnham Sterling Advises Hawaiian Airlines on Japanese Yen Financing of Four Airbus A330 and Two A321neo Aircra ft
Wall Street Journal
GREENWICH, Conn., Dec. 9, 2019 /PRNewswire/ -- Burnham Sterling & Co. LLC (Burnham Sterling), a financial advisory firm specializing in large asset financing, today announced it acted as exclusive financial advisor and placement agent to Hawaiian Airlines (NASDAQ: HA) for the Japanese yen (JPY)-denominated financings of four Airbus A330 and two A321neo aircraft.
"Burnham Sterling helped us execute this very innovative financing with a fixed coupon well under 1.0%," said Shannon Okinaka, Chief Financial Officer at Hawaiian Airlines. "This financing solution has been a win-win for Hawaiian, as it serves the dual purpose of providing a natural hedge to our growing JPY revenues while lowering our all-in financing cost. Most importantly, we were introduced to eight new investors in the Japanese market by the Burnham team, which all took place in the transaction."
"The success of this transaction was attributable to identifying first-time investors for Hawaiian, including Japanese regional banks, leasing and insurance company participants. We were especially pleased Hawaiian achieved Yen pricing below their swapped USD debt pricing," said Michael Dickey Morgan, Executive Managing Director at Burnham Sterling. "This follows our first successful JPY transaction we completed for Hawaiian last year. It was exciting to see our deep placement capabilities expand access and increase investor demand for Hawaiian."
Burnham Sterling structured and placed the transaction with eight institutional investors in Japan, all of which were first-time investors in Hawaiian.
About Burnham Sterling
Burnham Sterling is a specialized financial advisor focused on the transportation and other large asset financings. Burnham Sterling has closed billions of dollars in financings for clients such as Airbus, Avianca, Delta Air Lines, SAS, United Technologies Corporation, and many more. Transactions include debt placements, tax- subsidized leases and operating leases. Burnham Sterling is affiliated with Greenwich Aircraft Leasing, a lessor/manager of 32 commercial aircraft on lease to major airlines in Europe and the Americas. For more information visit the company's website at www.burnhamsterling.com.
For more information please contact: Matt Dallas
Burnham Sterling
+1 (203) 769-5916 matt.dallas@burnhamsterling.comView original content:http://www.prnewswire.com/news-releases/burnham-sterling- advises-hawaiian-airlines-on-japanese-yen-financing-of-four-airbus-a330-and-two- a321neo-aircraft-300970897.html
July 2018
Burnham Sterling Advises Hawaiian Airlines on Japanese Yen Financing of Two Airbus A321neo Aircraft
MarketWatch
GREENWICH, Conn., July 30, 2018 Burnham Sterling & Co. LLC (Burnham Sterling), a financial advisory firm specializing in large asset financing, today announced it acted as exclusive financial advisor to Hawaiian Airlines HA, +0.00% for the Japanese yen (JPY)-denominated financings of two Airbus A321neo aircraft. The transactions are Hawaiian's first-ever JPY financings.
"The Burnham Sterling team helped us develop and execute this successful, low-cost financing," said Shannon Okinaka, Chief Financial Officer at Hawaiian Airlines. "For these aircraft, we wanted a financing solution that served the dual purpose of providing a natural hedge to our growing JPY revenues and lowering our financing cost, and we achieved a fixed, 12-year coupon of approximately 1.0%. We were very pleased with Burnham's JPY-investor placement capabilities and their valuable help simplifying our first foreign currency transaction."
"We knew we could achieve good execution for this transaction due to our strong relationships, especially in the Japanese market," said Michael Dickey Morgan, Executive Managing Director at Burnham Sterling. "After introducing the Hawaiian story to many Japanese financial institutions, we were able to close two transactions that exceeded even our high expectations."
Burnham Sterling structured and placed the transaction with two institutional investors in Japan.
About Burnham Sterling Burnham Sterling is a specialized financial advisor focused on the transportation and other large asset financings. Burnham Sterling has closed billions of dollars in financings for clients such as Airbus, Avianca, Delta Air Lines, Hawaiian Airlines, SAS, United Technologies Corporation, and many more. Transactions include debt placements, tax-subsidized leases and operating leases. Burnham Sterling is affiliated with Greenwich Aircraft Leasing, a lessor/manager of 32 commercial aircraft on lease to major airlines in Europe and the Americas.
February 2018
New Tax Law Could Spur Swap Meet for Used Business Equipment
Jamie Knorring, president of commercial shelving maker B-O-F Corp. in the Chicago area, is planning to buy a used factory machine to make clamps as part of a broader plan to boost worker productivity.
Making workers more efficient isn't the only factor that makes it a good purchase for him. Buying the equipment can also lower his tax bill.
The Wall Street Journal
Jamie Knorring, president of commercial shelving maker B-O-F Corp. in the Chicago area, is planning to buy a used factory machine to make clamps as part of a broader plan to boost worker productivity.
Making workers more efficient isn't the only factor that makes it a good purchase for him. Buying the equipment can also lower his tax bill.
The new tax law allows firms to claim an immediate 100% deduction when they buy an asset, including purchases of used equipment that have already been written off by previous owners.
"It sweetens the deal," Mr. Knorring said of the tax benefits of buying the equipment. The company, which has about 70 employees and took in revenue last year of approximately $20 million, is planning to buy other equipment including a welding robot, purchases made easier to justify given the new tax incentive, he said.
Tax planners say the market for used equipment—including railcars, airplanes and industrial machines—is likely to heat up in the months ahead as firms try to take advantage of changes in the tax law. It could mean a shuffling of assets by companies purely for tax reasons and mergers and acquisitions that exploit new tax edges.
Before now, smaller companies could fully deduct purchases of used equipment, but larger firms had to spread those deductions over many years, and faster depreciation schedules applied only to new assets.
Under the new law, one company's gently worn asset could be worth more in another company's hands. That situation creates an incentive for deals that get tax deductions to companies that can use them and income to companies that already have lower tax rates.
Tax lawyers say they are flagging the possibilities to clients.
"We might well see the development of a kind of swap meet for slightly depreciated business assets," Chris Sanchirico, a tax law professor at the University of Pennsylvania.
Because the law is still new, the market hasn't yet caught fire.
Tax lawyers said one asset class that could get attention is airplanes.
Consider a case of a company that borrowed money to buy a $10 million airplane that is now worth $9 million. For tax purposes, depreciation deductions have already lowered its value to about $4 million. The tax law's new limits on business interest also limit the company's ability to deduct its interest costs.
The company might enter into a sale-leaseback deal that replaces the borrowing arrangement with a leasing deal that shares the tax benefits between both firms. A bank could buy the plane and take a full $9 million deduction on the aged plane right away. The company would owe taxes on its $5 million gain, but the new lease payments would be tax deductible for the airline, while the interest payments wouldn't have been.
"The assets now in the hands of the buyer are worth more than they were in the hands of the seller," said Eli Katz, a tax lawyer at Latham & Watkins LLP in New York.
The tax changes will likely accelerate purchases of new and used aircraft, said Michael Morgan, an investment banker at Burnham Sterling who advises airlines.
"It's certainly going to be helpful on the margin and we'll see more acquisition of aircraft because of this," Mr. Morgan said.
Sale-leaseback deals and other transactions that take advantage of the new rules could also make sense in the rail and energy industries, tax lawyers said.
The Internal Revenue Service has sometimes looked askance at sale-leaseback transactions as tax shelters, depending on how they are structured, and has created an "obstacle course" of rules that businesses must traverse, Mr. Sanchirico said.
Randolph Smith, a national practice leader at Grant Thornton, LLP, said any transactions would likely have to meet a test for having a business reason other than tax avoidance.
"It seems like another of these things that will be industry-specific and it will be relatively easy in some cases based on the idiosyncratic character of certain industries and might be harder or impossible in others," said Ari Glogower, a tax law professor at Ohio State University.
For now, the swapping and leasing markets are quiet as lawyers work through the possibilities.
"I haven't seen a groundswell of sale-leasebacks of used assets but I think we are going to see that type of thing," said David Burton, a tax lawyer at Mayer Brown LLP in New York who specializes in lease transactions. "It's coming. It's all coming."
March 2017
Avianca closes private placement
Colombian airline Avianca has closed a private placement with Burnham Sterling to fund three aircraft, comprising two Airbus A320 family and one Boeing 787.
Burnham Sterling acted as lead arranger and sole book runner in a privately-placed transaction.
The transaction utilised the Enhanced Aviation Investment Vehicle (EAIV) private debt structure developed by Burnham Sterling. It was Burnham Sterling’s first multi-currency EAIV providing both US Dollar and Euro funding for Avianca.
Excerpt from Airfinance Journal
Colombian airline Avianca has closed a private placement with Burnham Sterling to fund three aircraft, comprising two Airbus A320 family and one Boeing 787.
Burnham Sterling acted as lead arranger and sole book runner in a privately-placed transaction.
The transaction utilised the Enhanced Aviation Investment Vehicle (EAIV) private debt structure developed by Burnham Sterling. It was Burnham Sterling's first multi-currency EAIV providing both US Dollar and Euro funding for Avianca.
The deal, according to Burnham Sterling, provided Avianca with "attractive mezzanine funding", achieving loan-to-values as high as 95% of the appraised value. The transaction has a 12-year term and the last of the three aircraft was delivered in December 2016.
"This is Avianca's third successful transaction using Burnham Sterling's EAIV structure," says Lucia Avila, Fleet Finance Director of Avianca. "We thoroughly evaluated and tested EAIV against competing products and execution alternatives and found EAIV raises nearly as much cash as operating lease financing but with an all-in internal rate of return that is below that of an operating lease."
"Euro interest rates are at historic lows and we are proud to provide access to these low rates without the need for any supplemental collateral or mark-to-market provision imposed on Avianca," says Michael Dickey Morgan, executive managing director at Burnham Sterling. "Our EAIV structure allowed Avianca to access the Japanese market in a debt financing for the first time."
Burnham Sterling structured and placed the transaction with four institutional investors in Europe and Asia. Burnham Sterling and its affiliates have now financed fourteen new narrowbody and widebody aircraft for Avianca.
June 2016
Delta Airlines and Burnham Sterling Close $450 Million in Private Placements, Reaching Over $1 Billion in Total Transactions
Burnham Sterling & Co. LLC (Burnham Sterling), a financial advisor specializing in asset financing, announced that it closed a $450 million private placement for the world's second largest airline, Delta Air Lines (NYSE: DAL). Burnham Sterling and affiliates have now financed 48 mainline aircraft and raised over $1 billion in private placement transactions directly for Delta Air Lines.
GREENWICH, Conn., June 8, 2016 /PRNewswire/ -- Burnham Sterling & Co. LLC (Burnham Sterling), a financial advisor specializing in asset financing, announced that it closed a $450 million private placement for the world's second largest airline, Delta Air Lines (NYSE: DAL). Burnham Sterling and affiliates have now financed 48 mainline aircraft and raised over $1 billion in private placement transactions directly for Delta Air Lines.
"This is our third time working with Burnham Sterling, demonstrating our faith in their ability to execute complex private placements quickly and efficiently," said Andy Nelson, Assistant Treasurer of Delta Air Lines. "We were pleased that three-quarters of the capital raised was provided by seven new investors introduced by Burnham Sterling. Their team was consistently responsive and focused on achieving an on-time closing under the pricing and terms originally agreed."
"As the sole book runner, we were able to achieve Delta's objectives by developing and executing a placement strategy that insulated this transaction from the recent widening of high yield spreads," said Michael Dickey Morgan, Executive Managing Director of Burnham Sterling. "We structured the financing, arranged the rating and placed the transaction with a diverse set of investors around the world. Burnham Sterling has successfully completed private placement transactions for a host of global airlines and aircraft manufacturers."
About Burnham SterlingBurnham Sterling is a specialized financial advisor and an affiliate of Burnham Sterling Securities LLC, an investment bank focused on transportation, leasing, real estate and project finance. Burnham Sterling is led by Michael Dickey Morgan, the former head of Babcock & Brown's aircraft advisory and placement group and is based out of B&B's former office in Greenwich, Connecticut. Burnham Sterling and its affiliates have financed or acted as financial advisor on billions of dollars of major transportation assets. For more information visit the company's website at www.burnhamsterling.com.
For more information please contact:
Matt Dallas
Burnham Sterling
+1 (203) 769-5916
matt.dallas@burnhamsterling.comMay 2016
Burnham Sterling Closes Eight-Aircraft Private Placement with Avianca Holdings
Burnham Sterling Securities LLC (Burnham Sterling), an investment bank specializing in transportation asset finance, announced it has acted as lead arranger and sole book runner in a privately placed transaction for Avianca (NYSE: AVH), Latin America's second largest airline, for eight aircraft, including six Airbus A320 family and two Boeing 787 aircraft...
GREENWICH, Conn., March 17, 2016 /PRNewswire/ -- Burnham Sterling Securities LLC (Burnham Sterling), an investment bank specializing in transportation asset finance, announced it has acted as lead arranger and sole book runner in a privately placed transaction for Avianca (NYSE: AVH), Latin America's second largest airline, for eight aircraft, including six Airbus A320 family and two Boeing 787 aircraft. The transaction utilized the Enhanced Aviation Investment Vehicle (EAIV) private EETC[1] Structure, which was developed by Burnham Sterling. The last of the eight aircraft delivered in December 2015. The total Burnham Sterling EAIV financing provided to Avianca accounted for 65% of the Company total fleet financing needs for the year 2015.
"This is Avianca's second transaction using Burnham Sterling's EAIV structure," said Diana Calixto, Treasurer of Avianca. "We thoroughly evaluated and tested EAIV against competing products and execution alternatives, including EETCs. We are very pleased with the pricing, terms and simplicity achieved by Burnham Sterling through EAIV and receiving financing consistent with the terms agreed months in advance of closing. We were especially impressed with the new institutional investor relationships Burnham Sterling created."
"Every investor in the Burnham EAIV financings closed by Avianca was a first-time investor for the airline, expanding the breadth and depth of their investor universe," said Michael Dickey Morgan, Executive Managing Director at Burnham Sterling. We are particularly pleased that our EAIV structure allowed Avianca to access the U.S. and Korean institutional investor market.
Burnham Sterling structured the transaction, arranged the rating and placed the transaction with six major institutional investors in the U.S., Europe and Asia.
About Burnham SterlingBurnham Sterling is a specialized investment bank focused on the transportation and leasing industries. Burnham Sterling is led by Michael Dickey Morgan, the former head of Babcock & Brown's aircraft advisory and placement group and is based out of B&B's former Greenwich, Connecticut office. Burnham Sterling and its affiliates have financed or acted as financial advisor on billions of dollars of major transportation assets. For more information visit the company's website at www.burnhamsterling.com.
For more information please contact:
Matt Dallas
Burnham Sterling
+1 (203) 769-5916
matt.dallas@burnhamsterling.comMarch 2016
Private EETCs can offer compelling pricing for fleet financing
Excerpt from Aviation Finance
Investment bank Burnham Sterling recently closed its second privately placed EETC for Avianca to finance eight of the South American airline group's 2015 aircraft deliveries. Aviation Finance's Dustin O'Neill spoke with Burnham Sterling's Michael Dickey Morgan on the recent transaction, the bank's proprietary EAIV (Enhanced Aviation Investment Vehicle) structure, issuing private EETCs, and the broader aviation finance market.
Excerpt from Aviation Finance
Investment bank Burnham Sterling recently closed its second privately placed EETC for Avianca to finance eight of the South American airline group's 2015 aircraft deliveries. Aviation Finance's Dustin O'Neill spoke with Burnham Sterling's Michael Dickey Morgan on the recent transaction, the bank's proprietary EAIV (Enhanced Aviation Investment Vehicle) structure, issuing private EETCs, and the broader aviation finance market.
The transaction used Burnham Sterling's proprietary 'Enhanced Aviation Investment Vehicle' (EAIV) private EETC Structure and it is the second time that Avianca has used the structure to finance its aircraft. We asked Michael Dickey Morgan, Executive Managing Director at Burnham Sterling, to explain the product and the attractions of issuing a private EETC over a public EETC.
'The EAIV is structured to be a privately placed EETC. The EETC is the most successful product in the aircraft financing market but it has many shortfalls for airline issuers,' says Morgan.
'Firstly, as a public transaction there are very high upfront costs and processes. To prepare a prospectus to do an EETC is a very significant and costly undertaking. The private nature of the EAIV structure means these upfront costs are lower. As a private transaction the ability to document and close is more straight forward and less costly,'
'Secondly, EETCs require a liquidity facility from a third party bank. This facility attracts upfront fees for the maximum committed amount, as well as commitment fees for the committed but undrawn amount, in addition any drawn cash can attract interest of as much as 400 basis points over LIBOR to fund the interest. The bank also jumps ahead of investors in the repayment waterfall,' says Morgan. He adds that many private placement investors don't value the concept of the liquidity facility. 'The EAIV product avoids the liquidity facility and all of the costs of that, we use structural enhancements in the transaction to address the liquidity issue.'
'The EAIV has a significant advantage on upfront costs, and in the case of the Avianca transaction, we feel the deal economics were significantly better than what was achieved by LATAM in the EETC market which issued at around the same time,' he said.
Morgan says EAIVs are rated by Nationally Recognized Statistical Rating Organizations (NRSRO), in the case of the latest deal, Kroll Bond Ratings rated it as investment grade.
'Another significant advantage of the EAIV over an EETC is that in an EAIV the transaction is committed in advance by investors on the closing day but it remains undrawn. When an airline issues an EETC it has to fund the entire amount of the issuance from day one, any cash that is not used immediately is parked in an escrow account. So in an EETC the airline pays the full coupon, the cash in the escrow is making almost nothing, as it waits for delivery of the aircraft that are being financed by the EETC. In some cases deliveries may be 12 or 18 months away yet an EETC issuer pays interest on the entire amount, this means the carry costs can be very high. In the EAIV airlines only draw the funds once the aircraft are delivered. If the delivery is 6 months out that can be a significant saving in coupon for the airline. We do charge a commitment fee, about 50 basis points per annum, but it is a significant saving over the EETC. The EAIV is fully committed, a legally binding commitment, but the airline doesn't have to pay interest on money they can't use.'
Avianca transaction
This is Avianca's second transaction using the EAIV and one of the advantages in using it was the operational flexibility it offered the airline group according to Morgan. 'Avianca told us that they were able to get a significant amount of operational flexibility by using the EAIV product.' Avianca has four operating airlines, and the EAIV allows Avianca to operate the financed aircraft under any of their four operating certificates. A major part of this transaction, says Morgan, was this multi-jurisdictional aspect and ensuring the final deal would give Avianca the flexibility it required, a 'milestone' for Burnham Sterling. 'We had four different operator jurisdictions, Colombia, Peru, Costa Rica and El Salvador, all of which are permitted to operate the aircraft, creating significant issues with regard to how investor collateral works. Avianca were able to achieve the full operational flexibility under the EAIV. Given that some of the jurisdictions don't have a lot of a repossession history to rely on, we are proud of the transaction.'The transaction itself covered 8 aircraft. In a very competitive market, Morgan said the deal at one point was downsized to a 4 aircraft transaction as the airline group weighed up EETC and bank debt with other players, but the final transaction was scaled up to eight aircraft - six Airbus A320 family and two Boeing 787 aircraft - which Morgan says Burnham Sterling had significant investor demand. The $380 million transaction was placed with six institutional investors in the U.S., Germany and Korea and accounted for about 65 per cent of Avianca's fleeting financing needs in 2015. Importantly for Avianca all six of the investors were first-time investors in the airline with Avianca's treasurer Diana Calixto 'specially impressed with the new institutional investor relationships Burnham Sterling created' and also praised 'the pricing, terms and simplicity' of the transaction that were 'consistent with the terms agreed months in advance of closing.'
Morgan says that he expects to close out about another two or three EAIVs in 2016 and that they are currently offering 'very competitive, and even compelling' pricing in comparison to public EETCs and bank debt. Outside of the investment bank's EAIV activity Morgan says, 'The market continues to be robust, we are closing a lot of transactions, I think we are going to continue to see a lot of activity in the market this year. I think capital markets will remain attractive to the aviation sector. If you look at EETC spreads, they have widened along with most other corporate and high yield spreads but this market is doing relatively well. The airline industry is a big beneficiary of lower oil prices and is a bit of a safe haven relative to some other industries right now.'
April 2015
Delta announces $647m refinancing
Excerpt from Airfinance Journal
Delta Airlines has announced a $647 million refinancing that closed in 3Q 2014.
The private placement involved institutional debt from a range of investors and banks. Delta mandated investment bank Burnham Sterling in August last year to structure and place the loans. It acted as sole arranger and placement agent for the transaction.
Excerpt from Airfinance Journal
Delta Airlines has announced a $647 million refinancing that closed in 3Q 2014.
The private placement involved institutional debt from a range of investors and banks. Delta mandated investment bank Burnham Sterling in August last year to structure and place the loans. It acted as sole arranger and placement agent for the transaction.
The senior secured debt was secured against 17 aircraft, including 16 A330s and one A319.
The MSNs of the aircraft are: 2095, 0633, 0722, 0663, 0827, 0718, 0621, 0843, 0857, 0858, 0859, 0806, 0817, 0614, 0591, 0609 and 0631.
"We retained Burnham Sterling as our placement agent on refinancing transactions valued over $600 million in 2014, and we were very pleased with their investor access, extensive market knowledge, and speed in execution," said Andy Nelson, Assistant Treasurer of Delta Air Lines.
March 2015
Airline Economics article - "New Kids on the Block"
Excerpt from Airline Economics
An EETC-like product has recently been publicized with the disclosure that Avianca had closed a $153 million privately placement Enhanced Aviation Investment Vehicle private EETC Structure (EAIV) in November and December of 2014. The airline group is also prepping the launch of a much larger repeat transaction later this year.
Excerpt from Airline Economics
An EETC-like product has recently been publicized with the disclosure that Avianca had closed a $153 million privately placement Enhanced Aviation Investment Vehicle private EETC Structure (EAIV) in November and December of 2014. The airline group is also prepping the launch of a much larger repeat transaction later this year.
Burnham Sterling Securities, an investment bank specializing in transportation asset finance, acted as lead arranger and sole book runner on the privately placed transaction for Avianca EAIV 2014. The transaction, which is similar in structure to a traditional US EETC, is secured on two new A320-family aircraft and one new Boeing 787 aircraft.
"This is the first time Avianca has been involved in this type of transaction, and we were very pleased with the execution of the deal and the flexibility it provides us with" said Gerardo Alfaro, Director of Fleet Finance at Avianca.
"We are experiencing strong and growing demand from new investor sources seeking to finance commercial aircraft," said Michael Dickey Morgan, Executive Managing Director at Burnham Sterling. "Burnham Sterling is structuring transactions to channel investor demand to meet the needs of airlines. We specialize in private placements, which provide access to a growing global investor base, bringing new investors and attractive terms to our clients in the airline industry."
Burnham Sterling structured the transaction, arranged the rating and placed the transaction with a major institutional investor.
Burnham Sterling states that this transaction is essentially "identical to EETC" as it works to increase debt issuance to investment grade. Few details of the private deal have been released although the transaction was structured with two tranches, A and B, which both achieved that investment grade rating.
Pricing of the tranches has not been disclosed, although Morgan stated that Avianca tested this transaction against other sources of capital available in the market and determined the EAIV structure was more attractive.The biggest challenge in the structuring of EAIV 2014 for Avianca was the airline group's own operational structure. Since Avianca is a holding company based in Panama, which owns four separate airlines in four countries - Colombia, El Salvador, Costa Rica and Peru-it has to get approval to base all of those three aircraft in all four of those countries, only one of which, Colombia, has implemented the Cape Town Convention.
"Normally, you have an airline that has one jurisdiction, Avianca is one airline but four jurisdictions-this was the biggest hurdle in the transaction," explains Morgan. "We had to get the rating agencies comfortable with the three non-Cape Town jurisdictions and Colombia, which has Cape Town but we still needed to work with them on Colombia as well. Just because the country has Cape Town doesn't mean it is automatically acceptable. We conducted a significant amount of legal work with law firms in each of those jurisdictions."
Regardless of the structural and legal challenges, the deal was structured relatively rapidly-Burnham Sterling started working with Avianca in May 2014 and the deal closed in November 2014.
Burnham Sterling has entered into a multi-year agreement with Avianca to source capital in new and innovative ways. "Avianca had never done a US private placement before, and they were so happy about it that they want to do it again in 2015," says Morgan.
Burnham Sterling is working with Avianca on a repeat of Avianca EAIV 2014, which will close this year. The new deal will be much larger, closer to $500 million and will be secured on a mixed pool of new aircraft, mainly 737s and A-320 family aircraft.
The 2015 transaction Burnham Sterling is targeting will involve multiple investor groups from the U.S., Europe and Japan. "We have our investor group already identified for that deal, and we are waiting now for the green light from Avianca" says Morgan.
Burnham Sterling closed approximately $600 million of EAIV transactions in 2014, which were all privately placed with airlines and lessors, with one secondary transaction. In 2015, the bank hopes to close about $1bn or more in 2015.
"Burnham Sterling closed over $1.5 billion of transactions in 2014 and we are especially proud to have introduced so many new investors to our issuer clients", said Morgan. It's looking like 2015 will be an even more active year, and we currently have more than $500 million of transactions in our pipeline. Our focus is on structuring customized transactions to channel investor demand and efficiently meet the needs of our clients."
The company's transactions in 2014 involved a mix of new and post-delivery mainline and regional aircraft and were completed on behalf of airlines, manufacturers and leasing companies, including Delta Air Lines, AerCap and Pratt & Whitney. Investors in the company's transactions include banks, leasing companies and fund managers.
"We retained Burnham Sterling as our placement agent on refinancing transactions valued over $600 in 2014, and we were very pleased with their investor access, extensive market knowledge, and speed in execution," said Andy Nelson, Assistant Treasurer of Delta Airlines.
Paul Oechsli, Treasurer of Pratt & Whitney adds "We have a long-standing relationship with Burnham Sterling, and once again we retained them as our placement agent in 2014, and they delivered an impressive outcome on almost $200 million of transactions for us. Their innovative solutions delivered significant incremental value to Pratt & Whitney which, without Burnham Sterling, we would not have achieved."
There are some in the industry who argue that EAIV's are not true EETC's, which in a sense is correct since they don't issue certificates nor is the cross subordination between the tranches, nor the liquid support. But in essence, an EAIV achieves the same goal as an EETC which is to issue investment grade-rated debt.
For issuers with fewer unencumbered aircraft EAIV's make sense. EETC's are expensive, and it only makes sense for issuers that are securing high value or high volume assets.
Using this structure, airlines can tap into this deep market. In these deals, and other smaller privately placed transactions, insurance companies can ensure their chunky orders stick.
Like EETC's, the EAIV structure can be used on other assets such as engines, parts, etc. Up to $1.5 bn EAIV transactions are expected to close in 2015. Many more non-US EETC's are expected to come to market during 2015, with many more mandates currently being worked on.
March 2015
Avianca closes EETC-like private placement
Excerpt from Global Transport Finance
Connecticut-based asset finance specialist Burnham Sterling Securities acted as lead arranger and sole bookrunner in a privately placed two-tranche transaction for Colombian flag carrier Avianca.
The financing, which closed in November and December 2014, covers two A320-family and a single B-787-8 aircraft.
Excerpt from Global Transport Finance
Connecticut-based asset finance specialist Burnham Sterling Securities acted as lead arranger and sole bookrunner in a privately placed two-tranche transaction for Colombian flag carrier Avianca.
The financing, which closed in November and December 2014, covers two A320-family and a single B-787-8 aircraft.
The transaction utilised a proprietary enhanced aviation investment vehicle (EAIV), described by the arranger as similar to an enhanced equipment trust certificate (EETC) issue.
Burnham Sterling, which specialises in private placements, structured the transaction, arranged the rating and placed the transaction with an institutional investor.
Michael Dickey Morgan, executive managing director at Burnham Sterling, told GTF that the deal features structural enhancements that negate the need for a liquidity facility.
He adds that pricing on the deal was at least as favourable as was available under a traditional EETC structure or with US Eximbank/European export credit agency-supported debt.
Burnham Sterling expects to replicate the structure for two additional B-787-8 and several A320-family aircraft in 2015.
GTF reported in August 2014 that Avianca had issued a request for proposals (RFP) to the market for the US Eximbank-supported financing of four B-787-8 aircraft.
In early April 2014, Avianca Holdings, together with subsidiary companies Grupo Taca Holdings and Avianca Leasing, priced a USD250 million reopening of its 2020 bonds at a 7.44 per cent in an offering that was more than 3.5-times oversubscribed.
Proceeds of the issue were earmarked primarily to fleet financing and other general corporate purposes.
In late December 2013, Bank of America Merrill Lynch, BTG, Citi, Deutsche Bank and UBS were joint bookrunners on the oversubscribed USD409 million initial public offering (IPO) for the carrier.
The deal was completed in a challenging environment, with the Colombian Colcap down 13 per cent in US dollar terms, and nearly 6 per cent in Colombian peso terms.
Avianca plans to acquire over 100 aircraft over the next seven years to meet rising passenger traffic in Latin America.
March 2015
The market for private EETCs
Aviation Finance
Burnham Sterling acted as lead arranger and sole book runner in a privately placed transaction for Avianca, Colombia's national airline which closed in November and December 2014, Aviation Finance speaks with the investment bank's executive managing director on the market.
Aviation Finance
Burnham Sterling acted as lead arranger and sole book runner in a privately placed transaction for Avianca, Colombia's national airline which closed in November and December 2014, Aviation Finance speaks with the investment bank's executive managing director on the market.
The investment bank Burnham Sterling Securities LLC acted as lead arranger and sole book runner in a privately placed transaction for Avianca, Colombia's national airline which closed in November and December 2014. The Avianca deal covered two A320s and one Boeing 787s and used an Enhanced Aviation Investment Vehicle private EETC Structure ("EAIV"), developed by Burnham Sterling.
At the time of the announcement Burnham Sterling's executive managing director Michael Dickey Morgan said 'We are experiencing strong and growing demand from new investor sources seeking to finance commercial aircraft. Burnham Sterling is structuring transactions to channel investor demand to meet the needs of airlines. We specialize in private placements which provide access to a growing global investor base, bringing new investors and attractive terms to our clients in the airline industry.' The deal was a first for Avianca who chose to use an EETC structure as it gives them flexibility in their financing.
Aviation Finance spoke with Burnham Sterling's executive managing director, Mike Dickey Morgan, on the market outlook for aviation assets.
Could you give your views on the strength of the private placement market for aviation assets in 2015?
We anticipate strong demand for aircraft-secured transactions in 2015, both from established and new investors.There has been much talk of an almost unprecedented demand for capital markets in the past year yet the supply has been somewhat slow. What sort of supply of eetc, abs do you see in 2015? What caused the market to be so slow for EETCs in 2014?
The industry's overall profitability has been robust, and the focus of many airlines has switched to deleveraging and balance sheet improvement. This means that, for those airlines that need financing, 2015 represents an opportunity to lower financing costs and tap new investors. Burnham Sterling is satisfying this demand through our innovative new financing products which offer flexible new options in a changing marketplace.There have been a number of non-US airlines who have issued EETCs this year, and in 2013, do you see this trend strengthening?
Yes, we closed a number of transactions in 2014 with non-U.S. airlines and see this trend accelerating in 2015.What new investors do you see coming to aviation assets? Of these new investors who are the most eager?
We are introducing many new parties to aviation transactions, including US and non-US institutional investors as well as regional banks and leasing companies worldwide.What assets will prove the most popular with capital market investors?
Burnham Sterling is working to educate investors and broaden the scope of aircraft that can be financed.Will investors become increasingly adventurous regarding the assets in which they are willing to invest on the near horizon?
Burnham Sterling is experiencing strong demand for all kinds of assets. For example, an investor new to turboprops closed our first $165 million financing earlier this month through a partnership with ATR. But even as Burnham Sterling experiences strong demand from its investors, we do not lose focus on placing transactions that are suitable, long term contributors to investors' portfolios.March 2015
Burnham Sterling completes over $1.5 billion of transactions in 2014
Airline Economics
Burnham Sterling Securities, an investment bank specializing in transportation asset finance, has completed more than $1.5 billion of transactions with its clients in 2014. The transactions, totaling $1,541,500,000, included the closing of senior and junior notes, senior loans, and the financing of aircraft on operating leases.
Airline Economics
Burnham Sterling Securities, an investment bank specializing in transportation asset finance, has completed more than $1.5 billion of transactions with its clients in 2014. The transactions, totaling $1,541,500,000, included the closing of senior and junior notes, senior loans, and the financing of aircraft on operating leases.
"Burnham Sterling closed over $1.5 billion of transactions in 2014 and we are especially proud to have introduced so many new investors to our issuer clients," said Michael Dickey Morgan, Executive Managing Director at Burnham Sterling. "It's looking like 2015 will be an even more active year and we currently have more than $500 million of transactions in our pipeline. Our focus is on structuring customized transactions to channel investor demand and efficiently meet the needs of our clients."
The company's transactions in 2014 involved a mix of new and post-delivery mainline and regional aircraft and were completed on behalf of some of the industry's top airlines, manufacturers and leasing companies, including Delta Air Lines, AerCap and Pratt & Whitney. Investors in the company's transactions include insurance companies, banks, leasing companies, and fund managers.
"We retained Burnham Sterling as our placement agent on refinancing transactions valued over $600 million in 2014, and we were very pleased with their investor access, extensive market knowledge, and speed in execution," said Andy Nelson, Assistant Treasurer of Delta Air Lines.
Paul Oechsli, Treasurer of Pratt & Whitney adds "We have a long-standing relationship with Burnham Sterling and once again we retained them as our placement agent in 2014, and they delivered an impressive outcome on almost $200 million of transactions for us. Their innovative solutions delivered significant incremental value to Pratt & Whitney which, without Burnham Sterling, we would not have achieved."
Burnham Sterling specializes in private placements and other innovative financing solutions with access to a global investor base of new industry participants.
October 2012
Scandinavian Mandates Burnham Sterling
Source: Flightglobal By Olivier Bonnassies
Scandinavian Airlines System (SAS) has retained the services again of aircraft advisory company Burnham Sterling for the sourcing of additional Airbus A320s.
The Scandinavian carrier is undergoing a narrowbody fleet renewal with different aircraft types at its three bases Copenhagen, Stockholm and Oslo.
Flightglobal By Olivier Bonnassies
Scandinavian Airlines System (SAS) has retained the services again of aircraft advisory company Burnham Sterling for the sourcing of additional Airbus A320s.
The Scandinavian carrier is undergoing a narrowbody fleet renewal with different aircraft types at its three bases Copenhagen, Stockholm and Oslo.
In Copenhagen, SAS will replace its Boeing MD-80 fleets with used A320s. The aircraft are a "bridge solution" until the new A320neo fleet arrives between 2016 and 2019. SAS has already signed operating leases on nine A320s but to complete the entire phase out of its MD-80 fleets the carrier needs five additional aircraft of the type.
Burnham Sterling sourced seven A320s for SAS last year and the aircraft are being delivered between December 2012 and 2014.
Founder and managing director Mike Dickey Morgan tells Flightglobal that SAS is again looking at 2005-build or younger aircraft. "The mandate is similar to the one in 2011. SAS is looking for A320s powered with International Aero Engines with four to five years lease terms," he says.
According to the terms of the mandate, SAS plans to take delivery of the five aircraft between the fourth quarter of 2013 and the early part of 2014.
"There are more A320s available than there is demand, so there is pressure on lessors to reduce lease rates," says Morgan.
Burnham Sterling is mainly composed of staff previously at Babcock & Brown and has used an enhanced version of the 737-800 sourcing project for WestJet while at Babcock & Brown to source A320s for SAS.
"Burnham organized the process to identify sources of A320s new to SAS, evaluate bids using proprietary technology and close transactions with no maintenance reserves."
SAS has also decided to operate Boeing 737 Next Generation aircraft to replace some MD-80s in Stockholm and 737 Classics in Oslo. The Scandinavian carrier contracted General Electric Commercial Aviation Services (CEGAS) for the lease of 21 737NGs including 12 used 737-700s and nine new 737-800s. The aircraft are being delivered between 2012 and 2014.
Last month SAS announced an agreement for the sale of four MD-82/87 aircraft as well as option on a further 19 MD-82 and 10 spare engines. If the option is exercised, the additional aircraft and engines will be re-delivered on a gradual basis between the first quarter of 2013 and the first quarter of 2015.
In total the Scandinavian carrier will have 21 737NGs and 15 A320s entering services through 2014. SAS has 30 A320neos as well as 11 options for delivery after 2016.
January 2012
AMR's Vedder Price-organized Ad Hoc Group Hires Burnham as Financial Advisor
Flightglobal Debt Wire
An ad hoc group of AMR Corp's ETC and PTC holders have hired Burnham Sterling as financial advisor, said two sources familiar with the matter.
The advisor will assist the consortium in restructuring its large portfolio of aircraft currently on lease or loan to the parent of American Airlines, the sources noted.
Flightglobal Debt Wire
An ad hoc group of AMR Corp's ETC and PTC holders have hired Burnham Sterling as financial advisor, said two sources familiar with the matter.
The advisor will assist the consortium in restructuring its large portfolio of aircraft currently on lease or loan to the parent of American Airlines, the sources noted.
As reported, this specific group formed last month under counsel from Vedder Price and is being led by Trilogy Capital. There is a separate group also consisting of ETC and PTC holders that is being advised by Bingham McCutchen.
Since AMR filed for Chapter 11 protection on 29 November, the legacy carrier has sent out proposals to creditors of the individual aircraft to restructure terms of the aircraft leases on the planes backing certain ETC and PTC transactions.
The debtor's USD 460m 6.25% convertible senior notes due 2014 last changed hands at 22.25 to yield 79.416%, according to MarketAxess.
A representative from Burnham Sterling declined to comment.
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1SAFE® means Structured Aircraft Financing Enhancement
2EAIV® means Enhanced Asset Investment Vehicle