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Airlines
Chorus making transformative acquisition of Falko Regional
February 28, 2022 By Wings Staff
If the deal closes, expected in the second quarter, Chorus Aviation anticipates having 32 airline customers in 23 countries. (Image: Chorus Aviation) Chorus Aviation on Feb. 27 announced it has entered into a sale and purchase agreement to acquire Falko Regional Aircraft Limited, a regional aircraft lessor based in the United Kingdom and owned by funds under the management of Fortress Investment Group LLC.
The total consideration for the transaction is approximately US$855 million comprised of US$445 million of cash consideration (inclusive of agreed adjustments) and approximately US$410 million of existing debt.
The transaction includes Falko’s asset management platform and Fortress’ equity interests in 126 owned and managed regional aircraft.
The combined company would have a total of 353 owned, operated, and managed regional aircraft. Upon closing, Chorus anticipates having 32 airline customers in 23 countries.
In related news, Brookfield has agreed to make an equity investment in Chorus in connection with the transaction. Conditional upon closing the acquisition, Brookfield will invest US$374 million in Chorus, including US$300 million of preferred equity and US$74 million of common equity.
The preferred equity will be non-convertible and will initially pay a dividend of 8.75 per cent annually in cash, or 9.5 per cent in kind, at Chorus’ option, with step-ups after the sixth anniversary. Chorus will issue 25,400,000 common shares at $3.70 per share and 18,642,772 common share purchase warrants with an exercise price of $4.60 per share. Upon closing the transaction, Brookfield will nominate David Levenson and Frank Yu to Chorus’ Board of Directors.
“The acquisition of Falko is transformative for Chorus, creating a world premier full-service provider in regional aviation,” said Joe Randell, President and Chief Executive Officer, Chorus. “We are extremely pleased to have Brookfield, a well-respected company with global reach, as our strategic cornerstone investor, bringing extensive experience in asset management, fundraising and capital markets.
