Chorus Aviation Inc has announced that it has completed its acquisition of Falko Regional Aircraft Limited, as previously announced on 27 February.
This acquisition transforms Chorus into a premier full-service provider in regional aviation with unique capabilities to maximise value at every stage of an aircraft’s lifecycle.
The completion of this transaction establishes Chorus as the world’s largest aircraft lessor focused solely on investing in the regional aircraft leasing space, and results in a portfolio of 348 regional aircraft with an aggregate value of approximately US$4.5 billion which are owned, managed, and/or operated by Chorus subsidiaries.
As contemplated by the acquisition agreement, Chorus expects to acquire the beneficial interests in five aircraft trusts on a deferred basis before the end of the second quarter of 2022 (subject to the satisfaction or waiver of specified conditions applicable to those transactions) bringing the total to 353 aircraft.
Joe Randell, President and Chief Executive Officer of Chorus, said: “I’m extremely pleased and very optimistic about our future growth opportunities. This transformative acquisition establishes Chorus as the world’s largest aircraft lessor focused on the regional aviation segment and a leading worldwide provider in all aspects of regional aviation.
“Further, the transaction is expected to be accretive to earnings and earnings per share in 2022. With the addition of Falko’s asset management platform, we will shift to growing our leasing business through an asset-light model, significantly increasing cash flow generation, improving return on invested capital, and facilitating the pursuit of larger deals with more efficient access to equity capital.
“Growth through accessing third party capital reduces balance sheet exposure, lowering debt and residual value asset risk, while also enhancing stability and diversity of earnings, through asset management fees. The combined leasing platforms also present a broadened market opportunity covering the full age spectrum of regional aircraft from new deliveries to mid and end-of-life aircraft. Chorus’s technical skills and capabilities, including aircraft repurposing, end of life disassembly, and parts provisioning and sales, provide multiple opportunities to maximize returns on aircraft assets.”
Concurrent with the closing of the Falko acquisition, Chorus closed the private placement with an affiliate of Brookfield Special Investments Fund L.P. (Brookfield), as previously announced on 27 February 2022.
As a result of this transaction, Brookfield beneficially owns 25,400,000 (Class B Voting Shares) of Chorus (representing approximately 12.5% of Chorus’ issued and outstanding common shares2 of Chorus), 300,000 Series 1 Preferred Shares of Chorus and 18,642,772 common share purchase warrants.
Chorus and Brookfield also entered into an Investor Rights Agreement in connection with Brookfield’s investment. This new relationship with Brookfield gives Chorus access to their extensive experience in asset management, fundraising and capital markets.
Mr Randell added: “I’m deeply grateful to our team for delivering significant value to our employees, customers, and shareholders. The Chorus Aviation Capital team’s dedication to growth since its inception in 2017 has helped make this significant milestone a reality; they are a terrific complement to the Falko team, and we are very pleased to welcome the Falko employees to the Chorus group. Our immediate priority is to seamlessly integrate operations and ensure the successful execution of the opportunities this transaction brings. We believe the timing of this endeavour is opportune as global air travel continues to resume and demand regional aircraft leasing increases.”
