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Terra Firma, Canada Pension Plan, inject additional $729m in aircraft lessor AWAS

10 Mar 2011

UK private equity firm and Canadian investor the Canada Pension Plan Investment Board (CPPIB) have agreed to inject a further $729m intoDublin aircraft lessor AWAS.

An initial tranche of $529m, to be paid by April this year, will be used to drive the company’s expansion programme, with Terra investing $246m and CPPIB $266m, along with $17m from other co-investors, with an additional $200m to follow.

Following the injection of the initial $529m, Terra Firma’s stake in the company will stand at 60 per cent, CPPIB’s at 25 per cent, and other co-investors at 15 per cent.

Terra Firma acquired AWAS from Morgan Stanley in 2006 for $2.5bn, expanding it 17 months later with the $5.2bn of San Francisco lessor Pegasus Aviation Finance Company from Oaktree Capital and the company’s management team for $5.2bn.

At the time of its acquisition, it held a portfolio of 155 aircraft, which has expanded to 200 commercial aircraft with a total value of $5bn, on lease to over 90 customers in 45 countries. The company has offices in New York, Miami and Singapore.

Terra Firma chairman Guy Hands said, “AWAS had an excellent 2010 ending substantially above budget and putting in place a major refinancing totalling over $1.1 billion through a highly successful bond issue and new term loan.”

“AWAS now has an order book of over $5 billion which will double the value of its current portfolio to over $10 billion,” he added.

Hands has taken a bullish stance on his firm’s future in the weeks following the loss of record label EMI to debtholder Citigroup, stating in an open letter to LPs that he was “hopeful” that investors in the fateful TFCP III fund would receive all their money back, in spite of the gaping hole the loss of EMI leaves in its balance sheet.

While still negative, the fund’s cash-on-cash multiple has risen 32 per cent to 0.42 per cent since 2009, while its predecessor fund has currently achieved a 1.75 per cent multiple.

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