FTAI Aviation Ltd. (NASDAQ: FTAI) (“FTAI” or the “Company")
announced today it has entered into definitive agreements providing
for the internalization of the Company’s management operations.
Internalization Agreement
Under the Internalization Agreement, the Company
and FIG LLC (the “Manager”) have terminated the Management and
Advisory Agreement, dated July 31, 2022 (the “Management
Agreement”), and the Services and Profit Sharing Agreement, dated
November 10, 2022 (the “Services and Profit Sharing Agreement”),
effective as of May 28, 2024 (the “Effective Date”). In connection
with the termination of the Management Agreement, the Company has
agreed to (i) pay the Manager $150 million in cash; (ii) pay the
Manager all accrued but not yet paid compensation and reimbursable
expenses due under the Management Agreement and/or the Services and
Profit Sharing Agreement, as well as certain other expenses; and
(iii) issue to the Manager 1,866,949 ordinary shares of the
Company.
As a result of the termination of the Management
Agreement, and subject to an agreed upon transition described in
more detail below, FTAI has ceased to be externally managed and now
operates as an internally managed company.
No Changes to Leadership
Team
The Company will continue to be managed by its
strong senior leadership team, with Joe Adams, as Chairman of the
Board and Chief Executive Officer; Angela Nam, as Chief Financial
Officer and Chief Accounting Officer; and David Moreno as a senior
executive. In addition, the Company intends to extend offers of
employment to certain other employees of the Manager who currently
provide services to the Company, including, but not limited to,
those who support FTAI’s Legal, IT, Accounting, Tax and Treasury
operations.
Expected Internalization
Benefits
The Company estimates that the internalization
will result in approximately $30 million of initial annualized cost
savings, rising significantly each year.
“The internalization of FTAI’s management
reflects the confidence in our team's capabilities and our vision
for long-term growth and success,” said Joe Adams, Chairman of the
Board and Chief Executive Officer. “This agreement creates
immediate cost savings, value for our shareholders and positions
FTAI to fully benefit from the tremendous potential we see ahead.
We look forward to an exciting future.”
Transition Services
Agreement
The Company and the Manager also entered into a
Transition Services Agreement (the “Transition Services
Agreement”), pursuant to which the Manager will provide (or cause
to be provided), all of the services it was previously providing to
the Company immediately prior to the Effective Date for a
transition period. In addition, under the Transition Services
Agreement, the Company is required to use commercially reasonable
efforts to make certain employees of the Company available to
provide certain services to the Manager for a transition
period.
Former Manager
Prior to the internalization, the Company was
externally managed by the Manager, an affiliate of Fortress
Investment Group LLC, subject to oversight by the board of
directors of the Company (the “Board”), pursuant to the Management
Agreement. In accordance with the Management Agreement, the Manager
provided the Company with a management team, certain other
personnel and corporate infrastructure. Accordingly, the
individuals who provided services to the Company pursuant to the
Management Agreement were employees of the Manager. In exchange for
the Manager’s services, the Company paid the Manager a management
fee and reimbursed the Manager for certain expenses. In addition,
an affiliate of the Manager was entitled to incentive allocations
(comprised of income incentive allocations and capital gains
incentive allocations). The Company also reimbursed the Manager for
various expenses incurred on the Company’s behalf.
Special Committee of the Board of
Directors
The Board formed a Special Committee composed
entirely of independent and disinterested directors to negotiate
and approve the terms of the internalization. In connection with
the internalization, Houlihan Lokey served as financial advisor and
Wilson Sonsini Goodrich & Rosati served as counsel to the
Special Committee, Citi served as the exclusive financial advisor
and Skadden, Arps, Slate, Meagher & Flom LLP served as counsel
to the Manager.
About FTAI Aviation
Ltd.
FTAI owns and maintains commercial jet engines
with a focus on CFM56 and V2500 engines. FTAI’s propriety portfolio
of products, including The Module Factory and a joint venture to
manufacture engine PMA, enables it to provide cost savings and
flexibility to its airline, lessor, and maintenance, repair, and
operations customer base. Additionally, FTAI owns and leases jet
aircraft which often facilitates the acquisition of engines at
attractive prices. FTAI invests in aviation assets and aerospace
products that generate strong and stable cash flows with the
potential for earnings growth and asset appreciation.
Cautionary Note Regarding
Forward-Looking Statements
Certain statements in this press release may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but
not limited to, statements regarding the internalization of the
Company’s management and the potential costs and benefits thereof,
the expected post-internalization employees and related
transactions. These statements are based on management’s current
expectations and beliefs and are subject to a number of trends and
uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements, many of
which are beyond the Company’s control. These risks and
uncertainties include, but are not limited to, risks and
uncertainties relating to the Company’s ability to successfully
manage the transition to self-management and the ability to achieve
expected cost savings or the timing thereof; unanticipated
difficulties financing the internalization; unanticipated
expenditures relating to or liabilities arising from the
internalization; litigation or regulatory issues relating to the
internalization; and the impact of the internalization on
relationships with, and potential difficulties retaining, the
Company’s executive officers, employees and directors on a
go-forward basis. The Company can give no assurance that its
expectations will be attained and such differences may be material.
Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a
discussion of some of the risks and important factors that could
affect such forward-looking statements, see the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the Company’s
most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q, which are available on the Company’s website
(www.ftaiaviation.com). In addition, new risks and uncertainties
emerge from time to time, and it is not possible for the Company to
predict or assess the impact of every factor that may cause its
actual results to differ from those contained in any
forward-looking statements. Such forward-looking statements speak
only as of the date of this press release. The Company expressly
disclaims any obligation to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with regard
thereto or change in events, conditions, or circumstances on which
any statement is based. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy any
securities.
For further information, please contact:
Alan AndreiniInvestor RelationsFTAI Aviation
Ltd.(646) 734-9414aandreini@fortress.com
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