Avation PLC has reached an agreement with bondholders for an extension to its 6.5% senior notes. The notes were due to mature in May 2021 but have been extended to October 2026 with 76% of bondholders voting in favor and subsequently signing a lock-up agreement. The work on extending the bond maturity has been going on for some months and has been a major obstacle inflicted upon the Avation business by the COVID-19 pandemic which has severely disrupted high yield markets that would normally be used to refinance such a commitment. The uncertainty regarding the capital structure has been resolved and will allow Avation to focus on a return to growth of the fleet as the impact of the pandemic lessens. The unsecured bonds have an outstanding balance of $342.6 million and represent approximately one third of the entire debt in the Company. The uncertainty surrounding the pending maturity of the unsecured bonds has been a major recent drag on the share price and the successful renegotiation of this maturity date is a major positive signal for Avation. Investors in Avation will know, that it has been the strong growth in fleet since the Company commenced operations in 2006 that drove revenue, earnings and the share price.
In addition to the resolution of these problems a majority of the airline lease revenues now at pre-COVID levels and Avation is now seeing a pathway to the business returning and then ultimately surpassing pre-COVID levels.