Aveos reaches agreement on recapitalization plan
Reduces its debt from approximately $800 M to $75 M
MONTREAL, Jan. 27 /PRNewswire/ - Aveos Fleet Performance Inc. (formerly ACTS) today announced that it has reached an agreement in principle with its lenders to reduce its outstanding debt and create an appropriate capital structure to support the company's long-term strategic plan and business objectives.
Under the terms of the agreement, Aveos' first and second lien debt will be reduced from approximately $800 million to $75 million. In addition, certain of the lenders will provide a new working capital facility of $75 million. As part of the transaction, Aveos' lenders have agreed to convert their remaining debt into equity and Air Canada will hold a minority stake.
"We are very pleased to have reached an agreement with our lenders," stated Chahram Bolouri, Aveos President and CEO. "The new capital structure combined with healthy EBITDA margins and a reduced cost structure will lay a foundation for long term growth and provide Aveos with the operating and financial flexibility to support its business plans and work with customers to leverage future growth opportunities."
"We look forward to a continued strong relationship with our customer, Air Canada, and thank our new owners, our other customers, employees, union, partners and suppliers for their continued support during the recapitalization process. It underscores their belief in the fundamentals of the company's business and its short-term and long-term outlook" continued Mr. Bolouri.
The closing of this transaction is expected to take place in the first quarter and is subject to customary closing conditions.
Aeroman, the Aveos affiliate in El Salvador, will not be affected by the restructuring.
Osler, Hoskin & Harcourt LLP and Simpson Thacher & Bartlett LLP are acting, among others, as legal advisors and Miller Buckfire & Co., LLC is acting as financial advisor to Aveos.
Weil, Gotshal & Manges LLP and Blake, Cassels & Graydon LLP are acting as legal advisors and SkyWorks Capital, LLC is acting as financial advisor to the first lien lenders.
Goodmans LLP are acting as legal advisor and RBC Capital Markets are acting as financial advisor to the second lien lender.
About Aveos
Aveos is a full-service maintenance, repair and overhaul (MRO) provider of airframe, engine, component and maintenance solutions. From maintenance facilities across Canada and in El Salvador, we provide integrated service solutions to over 100 customers, while focusing on building a robust network of strategic alliances. Aveos is committed to a tradition of providing world-class quality and expertise to customers across the Americas. To learn more, visit aveos.com.
Frequently Asked Questions
Consensual Financial Restructuring
Q. What did Aveos announce today?
A. We announced that we have reached an agreement in principle with our
lenders to reduce our outstanding debt and create an appropriate
capital structure to support the company's long-term strategic plan
and business objectives.
Q. What does today's announcement mean?
A. This is very good news for our company, our employees, customers,
partners and suppliers. The announcement means that the parties have
agreed on the framework for a new appropriate capital structure. The
restructuring plan will reduce our financial debt from approximately
$800 million to approximately $75 million. In addition, it will
provide Aveos with a new $75 million working capital facility (line of
credit). The new capital structure, combined with healthy EBITDA
margins and a reduced cost structure will lay a foundation for long-
term growth and provide the financial flexibility to support our
business plans.
Q. How is the restructuring plan changing Aveos ownership?
A. Aveos will have new owners. As part of the transaction, the lenders
have agreed to convert their remaining debt into equity and will hold
a majority stake. Air Canada, Aveos' largest customer will become a
shareholder with a minority stake. The new owners believe that the
fundamentals of the company's business remain strong and the short-
term to long-term outlook is positive.
Q. What prompted the new owners to participate in the plan to
recapitalize Aveos?
A. The new owners are firmly convinced that the fundamentals of our
business are strong and the short-term to long-term outlook is
positive. Their participation will improve our financial flexibility
and put us in an even stronger position to work with our customers to
leverage mutual growth opportunities as we move forward.
Q. Will the restructuring plan affect daily operations?
A. The restructuring plan, or recapitalization, will position us to
better focus on our operations, grow our business and do what we do
best - offer customers the best value, quality services and
reliability. Day-to-day contacts will remain the same and operations
will continue as planned for employees, customers and suppliers.
Q. Does this announcement mean Aveos is out of operating capital?
A. On the contrary, Aveos has reached an agreement in principle with
lenders on the terms of a plan to reduce its outstanding debt and
create and appropriate capital structure to support the company's
long-term objectives. Coupled with our strong financial performance in
2009, our debt reduction and a new $75 million working capital
facility (line of credit), we have the financial flexibility to
support our business plans and the operating flexibility to work with
customers on growth opportunities. In fact, despite the difficult
economic environment, Aveos has been EBITDA-positive for the past 9 of
11 quarters and its cash flow from operations has been positive since
Q1 2007. Moreover, Aveos has been weathering the economic crisis and
generating healthy EBITDA margins while working on restructuring its
finances, and significantly reduced its costs in 2008 and 2009 in line
with new economic realities. As a matter of best practice, we will
continue to manage our cash tightly, diligently control costs and
aggressively improve our businesses.
Q. Are there any conditions to the implementation of the financial
restructuring?
A. The closing of this transaction is expected to take place in the first
quarter, and is subject to customary closing conditions.
Q. What is the short-term to long-term forecast for Aveos?
A. Aveos is paving the way for a brighter future. We will be emerging
from our financial restructuring process with a much healthier balance
sheet and are generating healthy EBITDA margins. The new capital
structure combined with healthy EBITDA margins and reduced cost
structure will put us in an even stronger position to work with our
customers to leverage mutual growth opportunities as we move forward.
Q. Going forward, what is Aveos' strategy and overall mission?
A. Aveos continues towards its vision of becoming a total solutions
provider of maintenance services. We have been building a network of
partners to deliver comprehensive and seamless fleet performance
expertise, expanding our capabilities and improving our speed of
delivery - key benefits for our customers. Our deep industry knowledge
from having been a part of an airline allows us to better focus on
meeting customer needs and the objectives in our business plan are
designed to achieve short-term to long-term profitability, while
offering customers the best value, quality services and reliability.
We are emerging from our recapitalization stronger, better aligned to
meet the needs of a changing market and with the operating flexibility
to be a world-class leader in the MRO industry.
Q. Does the restructuring process affect Aeroman?
A. Aeroman, the Aveos affiliate in El Salvador, is not affected by the
restructuring.
Q. Is there any impact on employees as a result of the restructuring?
A. There is no impact on employees as a result of this restructuring. As
well, the terms of the collective agreement are unaffected.
Q. How will the consensual restructuring affect customers?
A. The new capital structure, healthy EBITDA margins and reduced cost
structure will lay a solid foundation for long-term growth and give
Aveos the financial flexibility to support its business plans. We will
be in an even stronger position to work with our customers to leverage
mutual growth opportunities, and better focused on meeting their needs
and offering them the best value, quality services and reliability.
Q. Does the financial restructuring have any impact on payments for goods
delivered or services rendered?
A. There are no changes to our partners' ongoing relationship with Aveos.
They should communicate with their usual contacts regarding ongoing
payments.
SOURCE AVEOS FLEET PERFORMANCE INC.
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