NEW YORK and CORAL GABLES, Fla., Dec. 9, 2019
/PRNewswire/ -- Monocle Acquisition Corporation (Nasdaq:
MNCL), a public investment vehicle, and AerSale Corp.
("AerSale" or the "Company"), a leading
integrated, global provider of aviation aftermarket products and
services, today announced that they have entered into a definitive
agreement to merge in a transaction with an implied enterprise
value of approximately $430 million,
equating to approximately 6.3x AerSale's forecasted
2020 Adjusted EBITDA. The combined company, which will be named
AerSale Corporation, will be publicly traded on the Nasdaq Stock
Market.
AerSale, currently owned by Leonard Green & Partners,
Florida Growth Fund LLC and the Company's two
founders, is a leading global supplier of
aftermarket aircraft, spare engines, flight equipment,
maintenance, repair and overhaul (MRO) services, and used
serviceable material (USM) support. The Company also provides a
broad range of internally engineered proprietary repairs, products,
modifications, upgrades, and other cost-saving technical solutions.
AerSale focuses on commercial aircraft and engines from
their mid-life phase of operating service through asset
retirement. By utilizing its highly integrated suite of asset
management, maintenance and monetizing services, AerSale is able to
realize the highest value of mid-life flight equipment investments,
while also maximizing the value, reliability, performance and
safety of customers' aircraft and engines worldwide.
Headquartered in Coral Gables,
Florida and with strategically located operating facilities,
AerSale serves a growing global customer base. The Company's
management team, averaging approximately 25 years of directly
related multi-disciplined industry experience, has established
customer relationships across major airlines, cargo operators, MRO
shops, OEMs, government entities, and aircraft leasing companies.
Supported by proprietary aircraft, engine and component pricing,
utilization and transaction data, unique fleet analytics, and a
highly structured opportunity identification and valuation process,
AerSale's leadership has demonstrated financial success across
economic cycles, and has well-positioned the Company to grow in the
rapidly expanding commercial aviation aftermarket sector.
Under the terms of the merger agreement, which was unanimously
approved by the boards of directors of both Monocle and AerSale,
existing AerSale shareholders, including Leonard Green &
Partners, will receive $250 million
in cash and $150 million in newly
issued common equity at closing, subject to adjustment to the mix
of consideration under certain circumstances. The cash
component of the purchase price is expected to be funded by
Monocle's cash in trust and the proceeds of an asset
backed debt financing facility. Monocle has secured a
commitment for this facility from Wells Fargo Bank, N.A. and PNC
Bank, National Association, and may seek to raise additional
capital through junior debt or other sources of debt
financing. Under certain conditions, the parties have the
option to reduce the cash consideration to not less than
$200 million in exchange for the
issuance of up to $50 million of convertible preferred equity
to existing AerSale shareholders. In connection with the
transaction and after closing, existing AerSale shareholders will
also have the right to receive $33
million in additional value in stock consideration based on
the post-closing share price performance.
Following the transaction, Leonard Green & Partners, Florida
Growth Fund LLC and members of AerSale's management
team will continue to own approximately 42% of the outstanding
shares of the combined company, subject to certain transaction
closing assumptions. The remaining outstanding shares of the
combined company will be held by public stockholders, including the
founders of Monocle.
On a pro forma basis, AerSale expects to generate approximately
$310 million in revenue and a 17.6%
Adjusted EBITDA margin for the full year 2019. The Company
forecasts significant revenue and Adjusted EBITDA growth over the
next several years resulting from the increasing contribution of
MRO products and services, the rollout of higher margin proprietary
engineered products and services, the anticipated availability of
attractively-priced retiring aircraft and engines for acquisition,
increased penetration of the government and defense marketplace,
improved operating leverage, and continuing M&A activity.
Following completion of the proposed transaction, AerSale will
be led by its highly experienced management team, including
Co-Founder, Chairman and Chief Executive Officer Nicolas Finazzo; Co-Founder and Executive Vice
Chairman Robert Nichols; Division
President of MRO Services Basil
Barimo; Division President of Airframe & Engine
Materials Gary Jones; Chief
Technology Officer and Division President of Engineered Solutions
Iso Nezaj; Division President of
Aircraft & Engine Management Craig
Wright; and Chief Financial Officer Martin Garmendia. It is anticipated that the
Board of Directors of the combined company will be comprised of
eight members: its two co-founders, Mr. Finazzo and Mr. Nichols;
two members of the Monocle management team; one member from Leonard
Green & Partners; and three additional independent
directors.
Mr. Finazzo commented, "I am extremely proud of the
business that our team has built over the past decade. A number of
years ago, we recognized the competitive advantages of becoming
fully integrated across the aviation aftermarket. To this end, we
have progressively expanded into MRO services, and at the same time
focused relentlessly on maximizing their integration with our asset
management solutions business unit. We believe that today AerSale
offers one of the broadest range of integrated aircraft asset
management solutions and technical capabilities available to meet
the expanding needs of aftermarket flight equipment stakeholders
worldwide. Entering the public markets is an exciting step
for our company, and we are eager to achieve this through our
transaction with Monocle and our continuing relationship with
Leonard Green & Partners. This transaction will undoubtedly
benefit our customers, employees, shareholders, and suppliers, as
we continue to expand our market share and further strengthen our
reputation as a market leader in aviation aftermarket
solutions."
Monocle raised $172.5 million
through an initial public offering ("IPO") on
February 11, 2019. During the IPO
process, Monocle stated its intent to serve as a platform for
consolidation and growth opportunities by partnering with companies
in the aerospace & defense sectors. The Monocle founders –
Eric Zahler, Sai Devabhaktuni and
Richard Townsend – have extensive
expertise in the aerospace & defense industry, and decades of
experience operating and growing public companies in the
sector.
Mr. Zahler, Chief Executive Officer and President of Monocle,
commented, "AerSale aligns perfectly with the
investment criteria we outlined throughout Monocle's
IPO process. The aviation aftermarket sector has proven
resilient to economic cycles, and we believe presents a compelling
opportunity for future growth. AerSale has created significant
competitive advantages through regulatory streamlining, data
capture and analytics, long-term customer relationships, and its
integrated business model. We are acquiring this business at an
attractive valuation relative to public aerospace peers, while
providing significant potential to generate shareholder value over
the near- and long-term."
"AerSale provides Monocle a strong platform that we
believe is scalable through sustained organic growth and
disciplined M&A in a highly-fragmented sector of the aviation
industry," added Mr. Devabhaktuni, Chairman of Monocle.
"We were immediately impressed by the AerSale
leadership team's deep industry expertise, broad
industry relationships, and ability to foster a culture of
excellence that has enabled the Company to establish meaningful
competitive advantages. It is clear this company is ready for the
public market, and that a public listing will provide an additional
catalyst for accelerating growth. We look forward to working with
AerSale's leadership team to build on the
Company's attractive growth trajectory."
Jonathan Seiffer, Senior Partner
at Leonard Green & Partners, added, "Since our
initial investment in AerSale, we have fully supported management
in executing our shared vision to create an integrated provider of
aviation aftermarket products and services. Today, AerSale is a
global business with a demonstrated ability to scale quickly and
efficiently. We believe the future remains very bright for the
company under this new structure, and we are excited to continue
supporting the highly experienced combined team as it pursues a
wide range of new growth opportunities."
Investment Thesis
Monocle believes the proposed transaction presents a compelling
investment opportunity for shareholders in several ways, including
the following:
- Well-positioned in the resilient and rapidly expanding
commercial aviation aftermarket;
- Maximizes return on investment through a differentiated and
integrated business model, leveraging a broad range of "Nose to
Tail" aftermarket products, services and technical solutions;
- Long-standing relationships with constituents across the value
chain to support procurement and monetization of assets;
- Multiple levers for sustained organic growth across existing
and new business lines;
- Scalable platform for growth through M&A, with a
demonstrated ability to acquire and integrate businesses;
- Proven leadership team with deep industry expertise across
multiple aviation business cycles; and
- Business combination at an attractive valuation relative to
public commercial aerospace aftermarket peers.
Completion of the transaction, which is expected in the first
half of 2020, is subject to Monocle shareholder approval and other
customary closing conditions.
Monocle is being advised by PJT Partners; Cowen; Cadwalader,
Wickersham & Taft LLP; Greenberg Traurig, LLP; and Alton
Aviation Consultancy. AerSale is being advised by RBC Capital
Markets; Harris Williams and Latham
& Watkins LLP.
Teleconference Information
Monocle and AerSale will
host a teleconference regarding the proposed transaction on
Monday, December 9, 2019, at
10:30 am ET. The teleconference
and accompanying slide presentation can be accessed by visiting
https://event.on24.com/wcc/r/2154390-1/A2D2AFD31A767E1FF8CF3D45AE919BA8.
The teleconference can also be accessed by dialing +1 (866) 342
8591 or +1 (203) 518 9713 and providing the conference ID 120919 or
asking for the Monocle/AerSale teleconference.
A replay will be available beginning on December 9, 2019 at 12:30
p.m. ET. The replay can be accessed at the same link
as the teleconference.
About Monocle Acquisition Corporation
Monocle
Acquisition Corporation is a public investment vehicle formed for
the purpose of effecting a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization, or
similar business combination with one or more businesses with a
focus in the aerospace and defense sectors.
About AerSale Corp.
A global aviation leader
celebrating its 10-year anniversary, AerSale specializes in the
sale, lease, and exchange of used aircraft, engines, and
components, in addition to providing a broad range of maintenance,
repair, and overhaul and engineering services for commercial
aircraft and components. AerSale also offers asset management
services to owners of end-of-life aircraft and engine portfolios.
For more information, please visit www.aersale.com.
About Leonard Green & Partners
Leonard Green &
Partners, L.P. is a leading private equity investment firm founded
in 1989 and based in Los Angeles.
The firm partners with experienced management teams and often with
founders to invest in market-leading companies. Since inception,
LGP has invested in over 90 companies in the form of traditional
buyouts, going-private transactions, recapitalizations, growth
equity, and selective public equity and debt positions. LGP
primarily focuses on companies providing services, including
consumer, business, and healthcare services, as well as retail,
distribution, and industrials. For more information, please
visit www.leonardgreen.com.
Forward-Looking Statements
This press release
includes "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995.
Monocle's and AerSale's actual results
may differ from their expectations, estimates and projections and
consequently, you should not rely on these forward looking
statements as predictions of future events. Words such as
"expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Monocle's and AerSale's
expectations with respect to future performance and anticipated
financial impacts of the consummation of the transactions described
in this press release (the "Business Combination"), the
satisfaction of the closing conditions to the Business Combination
and the timing of the completion of the Business Combination.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from the expected results. Most of these factors
are outside Monocle's and AerSale's
control and are difficult to predict. Factors that may cause
such differences include, but are not limited to: (1) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the Merger Agreement or could
otherwise cause the Business Combination to fail to close; (2) the
outcome of any legal proceedings that may be instituted against
Monocle and AerSale following the announcement of the Merger
Agreement and the Business Combination; (3) the inability to
complete the Business Combination, including due to failure to
obtain approvals from the stockholders of Monocle and AerSale or
other conditions to closing in the Merger Agreement; (4) the
inability to obtain or maintain the listing of the shares of common
stock of the post-acquisition company on The Nasdaq Stock Market
following the Business Combination; (5) the risk that the Business
Combination disrupts current plans and operations as a result of
the announcement and consummation of the Business Combination; (6)
the ability to recognize the anticipated benefits of the Business
Combination, which may be affected by, among other things,
competition, the ability of the combined company to grow and manage
growth profitably and retain its key employees; (7) costs related
to the Business Combination; (8) changes in applicable laws or
regulations; (9) the possibility that AerSale or the combined
company may be adversely affected by other economic, business,
and/or competitive factors; and (10) other risks and uncertainties
indicated from time to time in the proxy statement/prospectus
relating to the Business Combination, including those under
"Risk Factors" therein, and in Monocle's
other filings with the SEC. Monocle and AerSale caution that
the foregoing list of factors is not exclusive. Monocle and
AerSale further caution readers not to place undue reliance upon
any forward-looking statements, which speak only as of the date
made. Monocle and AerSale do not undertake to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events,
conditions or circumstances on which any such statement is based
unless required to do so under applicable law.
Non-GAAP Financial Measures
This press release
includes projected non-GAAP financial measures, including Adjusted
EBITDA and Adjusted EBITDA margin on a pro forma basis. AerSale
defines Adjusted EBITDA as net income (loss) after giving effect to
interest expense, depreciation and amortization, income tax expense
(benefit), management fees, the Med-View Settlement and one-time
adjustments and non-recurring items. AerSale defines Adjusted
EBITDA on a pro forma basis as Adjusted EBITDA after giving effect
to normalized Avborne EBITDA, normalized Qwest EBITDA and estimated
public company costs.
Monocle and AerSale believe that these non-GAAP measures of
financial results provide useful information to management and
investors regarding certain financial and business trends relating
to AerSale's financial condition and results of
operations. AerSale's management uses certain of
these non-GAAP measures to compare AerSale's
performance to that of prior periods for trend analyses and for
budgeting and planning purposes. These non-GAAP measures should not
be construed as an alternative to net income or net income margin
as an indicator of operating performance or as an alternative to
cash flow provided by operating activities as a measure of
liquidity (each as determined in accordance with GAAP).
You should review AerSale's audited financial
statements, which are included in the proxy statement/prospectus to
be delivered to Monocle's stockholders, and not rely
on any single financial measure to evaluate AerSale's
business. Other companies may calculate Adjusted EBITDA
differently, and therefore AerSale's Adjusted EBITDA
and other non-GAAP measures may not be directly comparable to
similarly titled measures of other companies.
Additional Information About the Transaction and Where to
Find it
In connection with the proposed transaction, Monocle
intends to file a Registration Statement on Form S-4, which will
include a preliminary proxy statement/prospectus of Monocle.
Monocle will mail a definitive proxy statement/prospectus and other
relevant documents to its stockholders. MONOCLES STOCKHOLDERS AND
OTHER INTERESTED PERSONS ARE ADVISED TO READ, WHEN AVAILABLE, THE
PRELIMINARY PROXY STATEMENT/PROSPECTUS AND THE AMENDMENTS THERETO
AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS AND DOCUMENTS
INCORPORATED BY REFERENCE THEREIN FILED IN CONNECTION WITH THE
PROPOSED TRANSACTION, AS THESE MATERIALS WILL CONTAIN IMPORTANT
INFORMATION ABOUT AERSALE, MONOCLE AND THE PROPOSED TRANSACTION.
When available, the definitive proxy statement/prospectus and other
relevant materials for the proposed transaction will be mailed to
stockholders of Monocle as of a record date to be established for
voting on the proposed transaction. Stockholders will also be able
to obtain copies of the preliminary proxy statement/prospectus, the
definitive proxy statement/prospectus and other documents filed
with the SEC that will be incorporated by reference therein,
without charge, once available, at the SEC's web site
at www.sec.gov.
Participants in the Solicitation
Monocle and AerSale
and their respective directors and executive officers, under SEC
rules, may be deemed to be participants in the solicitation of
proxies of Monocle's stockholders in connection with
the proposed transaction. Investors and security holders may obtain
more detailed information regarding the names and interests in the
proposed transaction of Monocle's directors and
officers in Monocle's filings with the SEC, including
Monocle's Form S-1 registration statement, which was
declared effective by the SEC on February 6,
2019. Information regarding the persons who may, under SEC
rules, be deemed participants in the solicitation of proxies to
Monocle's stockholders in connection with the proposed
business combination will be set forth in the proxy
statement/prospectus for the proposed business combination when
available. Additional information regarding the interests of
participants in the solicitation of proxies in connection with the
proposed business combination will be included in the registration
statement that the parties intend to file with the SEC.
No Offer or Solicitation
This press release is not a
proxy statement or solicitation of a proxy, consent or
authorization with respect to any securities or in respect of the
proposed transaction and shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, nor shall there be
any sale of any securities in any state or jurisdiction in which
such offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of such
state or jurisdiction.
Contact
Mark Semer /
Nicholas Capuano
Kekst CNC
(212) 521-4800
View original
content:http://www.prnewswire.com/news-releases/monocle-acquisition-and-aersale-announce-business-combination-300971191.html
SOURCE Monocle Acquisition Corporation
