RLPC-Consortium in talks with AIG to buy 81 pct of ILFC

LONDON Thu Oct 24, 2013 1:40pm EDT

LONDON Oct 24 (Reuters) - A private consortium is seeking to raise a $2.1 billion syndicated loan to back the purchase of an 81 percent stake in US insurer American International Group's aircraft leasing unit ILFC, banking sources said on Thursday.

AIG said in December 2012 that it had reached an agreement to sell a stake of up to 90 percent of California-based ILFC to a consortium of investors, based mainly in China, for $4.7 billion.

The investor group - P3 Investments and Taiwan's Fubon Group - is now buying an 81 percent stake and AIG will hold the remaining 19 percent, the sources said.

This proposal is still at a preliminary stage, but a draft term sheet for a $2.1 billion acquisition loan has already been sent to potential lenders, they added.

ILFC's employees will receive up to eight percent of the equity interest after the acquisition, which will dilute the private consortium's stake to 74.5 percent and AIG's stake to 17.5 percent, the sources said.

AIG could not immediately be reached for comment.

P3 Investments has been trying to raise acquisition loans in Asia for nearly a year.

P3 has revealed only background information about the identities of its partners, which it describes as limited partners from regional family offices from Hong Kong and leading financial institutions in Hong Kong, the sources said.

Potential lenders are asking for more clarity on the consortium partners to provide funding for the acquisition.

P3's partners include a Hong Kong-based asset management company led by Ng Wing-fai, two unnamed Hong Kong real estate companies and the chairman of a Hong Kong diversified conglomerate, the sources said.

Ng Wing-fai, co-founder of the now defunct pan-Asia fund Primus Financial Holdings, was on the board of directors for Fubon Hong Kong from 2004 to 2006.

LARGER LOAN

The $2.1 billion loan is bigger than a $1.5 billion financing that banks were originally approached about in July. It is structured to repay in full at maturity instead of having amortising repayments through the life of the loan as originally proposed, the sources said.

The deadline for banks to respond has been extended until the end of the year by co-ordinating lead banks Bank of Taiwan and Mega International Commercial Bank.

The loan is being raised through a special purpose vehicle called Jumbo Acquisition Ltd.

It will be priced at 500 basis points (bps) over Libor and steps down to 425 bps if debt ratios decrease.

BNP Paribas is financial adviser to the buying consortium, sources said.

ILFC is rated Ba3 by Moody's and BBB- by Standard & Poor's.

With around 1,000 owned and managed aircraft, ILFC operates with a global network of around 200 airlines in more than 80 countries, including major flag carriers, medium and small-sized airlines and cargo carriers, according to the company's website.

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