Nordic Aviation Capital (NAC) is talking to its lenders about increasing financial flexibility for a period of 15 months to mitigate the economic impact of Covid-19.
The lessor has appointed Rothschild as financial adviser as well as Clifford Chance and McCann Fitzgerald to negotiate with its lending partners.
Chairman Martin Moller tells Airfinance Journal that the lessor came into the Covid-19 crisis in a very strong position.
NAC even raised $858 million in a US private placement mid-February, a record-breaking private placement for the leasing sector. There were more than 26 investors involved in a transaction led by Citigroup, Credit Agricole and Goldman Sachs - of which eight represented new investor relationships.
But Moller recognises the challenge for the airline and leasing sector.
“We engaged early with lessees and in line with other lessors we received requests for substantial temporary relief on rentals,” he says.
“Around 80% of our clients have asked for some sort of relief, ranging from a complete standstill in payments to various degrees of arrangements,” he adds.
According to Moller, most lessees have asked for three-months rent deferrals.
“But as the picture started to shape, we had to evaluate the risks associated with rental deferrals. We became pro-active early on and two weeks into the crisis we engaged Rothschild as a financial adviser regarding our lending partners,” he says.
NAC has 103 banking and financial institution relationships, says Moller, who insists that “all of them have to be treated equally”.
“We are seeking agreements allowing flexibility around our debt payments. We have opted for a mid-term approach - 15 months - with our group of lenders rather than returning to the negotiating table every three months,” he says.
Moller admits that initial reaction was mixed. “One group of lenders understands our vision, another group is still forming its views,” he says.
Being an Irish-registered company, NAC needs 75% of lender consent as well as 50% of volume loan consent, according to the Companies Acts regulation.
Given the unprecedented situation affecting the airline industry, Moller is confident that in explaining its rationale, NAC will find an acceptable solution with lenders.
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