NEW YORK and CORAL GABLES, Fla., Sept. 8, 2020 /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 revised agreement to merge in a
transaction with a fully diluted enterprise value of approximately
$300 million, equating to
approximately 5.5x AerSale's forecasted 2021 Adjusted
EBITDA. The combined company will be named AerSale Corporation and
is expected to be publicly traded on the Nasdaq Stock Market. The
parties anticipate closing the transaction early in the fourth
quarter, after receipt of shareholder approval.
The revised merger agreement is supported by AerSale's current
owners – Leonard Green & Partners, Florida Growth Fund LLC and
the Company's two founders – and was unanimously
approved by the boards of directors of both Monocle and AerSale.
The transaction will be funded by a combination of cash held in
Monocle's trust account and common stock in the surviving company
to be issued to existing AerSale shareholders. AerSale will retain
the first $50 million of cash
proceeds from Monocle's trust account and 40% of all trust proceeds
in excess of $50 million. As a
result of this new structure, AerSale will be debt-free at close.
Further, assuming no redemptions from the trust account, it is
anticipated that AerSale will have approximately $128 million of cash on its balance sheet and
$110 million of additional liquidity
available under its existing asset backed debt financing
facility.
Following completion of the transaction, the current owners will
receive approximately $76 million in
cash and $241 million in newly issued
common equity, representing approximately 56% of the outstanding
shares of the combined company, assuming no redemptions by
Monocle's existing public shareholders. The current owners will
also have the right to receive 3 million shares of contingent
consideration depending upon the achievement of certain stock price
performance targets. AerSale's current owners can elect to receive
all of their transaction consideration in the form of common equity
in the surviving company, in which case the cash consideration will
be divided pro rata by the non-electing owners, if any, or if all
of AerSale's current owners make such election, the cash
consideration will be paid to the surviving company. Those
who elect to receive their transaction consideration in the form of
common equity will receive additional shares of common equity at
closing, and will also have the right to receive additional shares
of contingent consideration depending on the achievement of certain
stock price performance targets. The remaining outstanding shares
of the combined company will be held by public stockholders and the
founders of Monocle.
On a pro forma basis, AerSale expects to generate approximately
$307 million in revenue and a 17.6%
Adjusted EBITDA margin for the full year 2021. As the aviation
market recovers, the Company forecasts significant revenue and
Adjusted EBITDA growth over the next several years resulting from
the unprecedented availability of attractively-priced retired
aircraft and engines for acquisition, the growth in the e-commerce
and air cargo markets, the increasing contribution of MRO products
and services, the rollout of higher margin proprietary engineered
products and services, increased penetration of the government and
defense marketplace, improved operating leverage, and continuing
M&A activity.
Investment Thesis
The revised transaction structure
was created to maximize AerSale's ability to succeed in the current
environment, providing a strong, debt-free balance sheet with
substantial available liquidity. Monocle believes the revised
transaction presents a compelling opportunity for investors
representing the best public company opportunity to benefit from
the recovery in the commercial aviation market. Investors
will have the opportunity to:
- "Buy-in" at the trough in the market with a valuation well
below market peers;
- Invest alongside a highly experienced management team that has
a track record of being good capital allocators;
- Invest in a transaction that strongly aligns the interests of
all parties; and
- Invest in a company with:
-
- ample capital to take advantage of the unparalleled market
opportunity;
- a differentiated business model designed to maximize return on
investment and sustain cash flow across cycles; and
- multiple levers for sustained organic growth across existing
and new business lines.
Following completion of the 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
nine members: its two co-founders, Mr. Finazzo and Mr. Nichols;
three members appointed by the Monocle management team; and four
members appointed by Leonard Green & Partners.
Mr. Finazzo commented, "I am very proud of the resilience of our
business and our team over the past several months. The
aviation industry has fallen into a trough that is much deeper than
we ever could have anticipated, yet our Company and team are
purpose-built to be able to navigate these conditions. This trough
represents a buying opportunity we have been waiting a decade for –
since the financial crisis of 2008 – to acquire mid-technology
aircraft that feed our Asset Management Solutions business.
Further, we are extremely well positioned to profit from the
dramatic increase in stored aircraft, with over 500 mostly
mid-technology aircraft stored at our facilities to date, providing
us with an unanticipated and highly profitable source of
business. Storing these aircraft gives us a significant
competitive edge as we look to acquire new feedstock with lower
acquisition, transition, and logistics costs, and decreased
time-to-market. We also intend to aggressively pursue
exciting growth opportunities in e-commerce, air cargo and
proprietary engineered solutions. We look forward to partnering
with the Monocle team, and to the continued support of Leonard
Green, as we move forward in building our Company."
Jonathan Seiffer, Senior Partner
at Leonard Green & Partners, added, "This revised agreement
reflects our long-term commitment to supporting AerSale's
management team and our confidence in the vision we have pursued
together over the past decade. In particular, the new
structure positions AerSale to emerge from this deep industry
crisis with the financial strength needed to continue building its
leadership position in aviation aftermarket products and
services. Despite the unprecedented challenges the entire
industry will face for some time, we remain very confident in
AerSale's future."
Eric Zahler, Chief Executive
Officer and President of Monocle, commented, "Beginning in the
earliest days of the pandemic, the AerSale management team took
bold action to enable the company to weather these unprecedented
conditions and to be strongly positioned for the eventual
upturn. As a result of their efforts to properly manage costs
and to pursue available revenue-producing opportunities, AerSale
had been cash flow positive every month. Given the Monocle
and AerSale teams' extensive experience in executing and
integrating strategic acquisitions, we look forward to
collaborating to consolidate the fragmented industry at what we
expect will be attractive valuations. We thank the team at Leonard
Green for its collaboration and for its willingness to continue
supporting AerSale by partnering with us to create a capital
structure that will give the Company the financial flexibility it
needs to succeed as the market recovers and
beyond."
"At a time when the passenger sector of the global aviation
industry has been severely challenged by the pandemic, AerSale has
benefited from its robust and growing participation in the cargo
and military components of the market," added Sai Devabhaktuni,
Chairman of Monocle. "These businesses have generated meaningful
and rapidly growing revenue, especially as consumers have depended
more heavily on e-commerce. The AerSale management team has
done a masterful job of capitalizing on these attractive near-term
opportunities and preparing for the long-term benefits as the
industry normalizes. Now that certain geographic markets are
beginning to reopen and we can start to envision an eventual
recovery, our conviction in our investment thesis for AerSale
remains very strong."
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 an investment community teleconference regarding the revised
agreement tomorrow, Wednesday, September 9,
2020, at 8:00 am ET. The
teleconference and accompanying slide presentation can be accessed
by visiting
https://event.on24.com/wcc/r/2624949/A80C0DFA4C2D75671638696F9E7C0EDA.
The teleconference can also be accessed by dialing 800-938-2243
(US) or 402-220-1122 (international).
A replay will be available beginning on Wednesday, September 9, 2020 at 10:00 a.m. ET. The replay can be accessed at the
same link as the teleconference.
Monocle has filed the investor presentation relating to the
proposed transaction with the SEC as an exhibit to a Current Report
on Form 8-K, which is available on the SEC's website at
www.sec.gov.
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.
AerSale 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.
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 impact of the COVID-19
pandemic on the aviation industry and the aviation aftermarket
industry generally, and on AerSale's business in particular; (2)
the occurrence of any event, change or other circumstances that
could give rise to the termination of the Amended and Restated
Agreement and Plan of Merger (the "Amended and Restated Merger
Agreement") or could otherwise cause the Business Combination to
fail to close; (3) the outcome of any legal proceedings that may be
instituted against Monocle and AerSale following the announcement
of the Amended and Restated Merger Agreement and the Business
Combination; (4) 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 Amended and Restated Merger Agreement; (5) 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; (6) the risk that the Business Combination
disrupts current plans and operations as a result of the
announcement and consummation of the Business Combination; (7) 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; (8) costs related
to the Business Combination; (9) changes in applicable laws or
regulations; (10) the possibility that AerSale or the combined
company may be adversely affected by other economic, business,
and/or competitive factors; and (11) 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 cautions that the foregoing list of factors is not
exclusive. Monocle further cautions readers not to place undue
reliance upon any forward-looking statements, which speak only as
of the date made. Monocle does 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 airline 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).
A reconciliation of non-GAAP forward looking information to
their corresponding GAAP measures has not been provided due to the
lack of predictability regarding the various reconciling items such
as provision for income taxes and depreciation and amortization,
which are expected to have a material impact on these measures and
are out of AerSale and Monocle's control or cannot be reasonably
predicted without unreasonable efforts. 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
and Adjusted EBITDA margin on a pro forma basis differently,
and therefore AerSale's Adjusted EBITDA, Adjusted EBITDA margin on
a pro forma basis 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 Business Combination, Monocle
Holdings Inc., the newly formed holding company that will become
the parent of Monocle and AerSale at the closing of the Business
Combination, filed with the SEC on December
31, 2019 a Registration Statement on Form S-4, as amended by
Amendment No. 1 to the Registration Statement on Form S-4, filed
with the SEC on February 14, 2020
which included a preliminary proxy statement/prospectus of Monocle.
In connection with entering into the Amended and Retated Merger
Agreement, Monocle Holdings, Inc. will file Amendment No. 2 to the
Registration Statement on Form S-4 (as amended, the "Registration
Statement"). When available, the definitive proxy
statement/prospectus and other relevant materials for the Business
Combination will be mailed to stockholders of Monocle as of a
record date to be established for voting on the Business
Combination. You are advised to read, when available, the
preliminary proxy statement/prospectus as it shall be revised, and
the definitive proxy statement/prospectus and documents
incorporated by reference therein filed in connection with the
Business Combination, as these materials will contain important
information about Monocle, AerSale and the Business Combination.
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 U.S.
Securities and Exchange Commission ("SEC") that will be
incorporated by reference therein, without charge, once available,
at the SEC's web site at www.sec.gov, or by directing a request to:
Monocle Acquisition Corporation, 750 Lexington Avenue, Suite 1501,
New York, NY 10022.
Participants in the Solicitation
Monocle and its
directors and executive officers may be deemed participants in the
solicitation of proxies from Monocle's stockholders with respect to
the Business Combination. A list of the names of those directors
and executive officers and a description of their interests in
Monocle is contained in Monocle's preliminary proxy statement,
filed with the SEC on December 31,
2019, as amended by Amendment No. 1 to the preliminary proxy
statement, filed with the SEC on February
14, 2020, and is available free of charge at the SEC's web
site at www.sec.gov, or by directing a request to Monocle
Acquisition Corporation, 750 Lexington Avenue, Suite 1501,
New York, NY 10022. Additional
information regarding the interests of such participants will be
contained in the definitive proxy statement/prospectus for the
Business Combination when available. AerSale and its directors and
executive officers may also be deemed to be participants in the
solicitation of proxies from the stockholders of AerSale in
connection with the Business Combination. A list of the names of
such directors and executive officers and information regarding
their interests in the Business Combination will be included in the
definitive proxy statement/prospectus for the Business Combination
when available.
No Offer or Solicitation
This press release is for
informational purposes only and does not constitute an offer to
sell, a solicitation of an offer to buy, or a recommendation to
purchase any equity, debt or other financial instruments of Monocle
or AerSale or any of Monocle's or AerSale's affiliates, 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. The press release is not intended to form
the basis of any investment decision or any other decision in
respect of the Business Combination. The information contained
herein does not purport to be all-inclusive. The data contained
herein is derived from various internal and external sources.
Contact
Mark Semer
Kekst CNC
(917) 439-3507
View original
content:http://www.prnewswire.com/news-releases/monocle-acquisition-and-aersale-announce-revised-merger-agreement-301125868.html
SOURCE Monocle Acquisition Corporation; AerSale Corp.