Chorus Aviation to sell regional aircraft business in C$1.9bn deal to HPS Investment Partners

Chorus Aviation has entered into a sale and purchase agreement to sell all assets in its regional aircraft leasing (RAL) business - including its subsidiary Falko Regional Aircraft - for a sale price of C$1.9bn ($1.4bn). Net proceeds will equal C$814 million ($594.1 million). Milbank advised Chorus Aviation on the sale of Falko, together with Chorus' equity interests in certain aircraft investment funds managed by Falko and its affiliates, to investment funds managed by HPS Investment Partners. The transaction will eliminate C$1.7bn ($1.2bn) in financings, including all RAL segment aircraft-related debt, substantially all Chorus related debt, and C$300 million ($218.9 million) in Series 1 preferred shares. ""This is a compelling transaction for shareholders with net proceeds representing a significant premium to the implied market value of the segment and at a price consistent with the trading multiples of our aircraft leasing peers,"" said Chorus CEO and president Colin Copp. He added: ""This transaction will allow us to significantly reduce our debt and corporate financings, leaving Chorus with strong and predictable free cash flows from our long-term contracts. That will enable us to implement a sustainable return of capital program for our common shareholders and invest in future growth."" Chorus chair of the board of directors Paul Rivvett added: ""This decision follows rigorous analysis and a sharp focus on accelerating value creation for shareholders. With the macro-economic environment, it became apparent that the transition to an asset light leasing model would take longer than originally anticipated. ""Shareholders expected a strong, near-term catalyst for value creation. After evaluating various options, we determined that a sale of the RAL segment would give us the flexibility to pursue future growth and return capital to our shareholders faster."" The transaction is expected to close by the end of the year - pending shareholder approval of which it requires a two-thirds majority approval.