Monocle Acquisition Corp. and AerSale have agreed to a revised merger deal that is expected to see the combined, publicly traded company, AerSale Corp., formed by year-end.
The revised agreement replaces one announced in December 2019, before the COVID-19 pandemic hit and decimated global air transport demand, forcing many aircraft into storage or retirement. The new deal takes into account the current demand environment, with a value of about $300 million. The original deal was valued at $430 million.
AerSale, which has two main business lines—asset management and technical operations—expects to generate about $307 million in 2021 revenue, leveraging rising availability of used aircraft and engines that can be purchased to support the in-service fleet. The company plans to continue specializing in used serviceable material (USM) and leasing engines, while eyeing growth opportunities.
“We’re ready to expand,” said AerSale CEO Nicolas Finazzo, who will retain his position in the new entity. “We will selectively gobble up our less-disciplined and financially strapped competitors.”
Finazzo said AerSale is eyeing mid-life aircraft at discounted prices compared to pre-pandemic rates. These will help the company stock USM and provide green-time engines and other services to operators, particularly second-tier carriers, that will continue to rely on older models, post-pandemic. AerSale also will continue to provide airframe, engine, and component maintenance services at its four primary MRO facilities, as well as storage for out-of-service aircraft.
“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,” Finazzo said. “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.”
Under the new deal, AerSale’s current owners—Leonard Green & Partners, Florida Growth Fund LLC and company founders Robert Nichols and Finazzo—will receive $76 million in cash and $241 million in newly issued common equity at closing. The deal will be funded by a combination of cash held in public investment specialist Monocle’s trust account, and common stock in the surviving company to be issued to existing AerSale shareholders, the companies said. Both the AerSale and Monocle boards unanimously approved the new agreement.
The combined company is expected to trade on the Nasdaq stock market following an early fourth-quarter closing of the deal. Shareholders still must approve the transaction.
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