Florida-based cargo provider Western Global Airlines is set to enter the junk bond market for the first with issuance of $410 million of senior unsecured notes due in 2025.
Western Global intends to use the proceeds to fund the purchase of part of the shareholdings from its existing shareholders on behalf of an employee share ownership trust, according to Bloomberg.
The $410 million deal would be the first time the cargo provider has entered the junk bond market and if the issuance is completed the company’s chief executive Jim Neff, and other shareholders, will sell up to 49% of the company to an employee stock ownership plan (ESOP).
According to Bloomberg such an approach is highly tax efficient and would also result in shareholders receiving a pay-out.
The proposed structure will see Western Global lend funds from the bond offering to the newly formed ESOP, which will use the cash to buy the stake in the airline, while the company will repay the debt over time.