Milbank, Tweed, Hadley & McCloy has advised underwriters in structuring $797 million in enhanced equipment notes issued by Virgin Australia Holdings Limited. The offering represents the Australian carrier’s first foray in the global debt markets.
Milbank represented Goldman Sachs, Credit Agricole, and Natixis in the transaction, which is being offered in four separate investor tranches.
The notes will be collateralized by 24 Boeing aircraft currently in Virgin Australia’s fleet. The weighted average coupon for three of the four classes is 5.5%. The added Class D tranche of $64.6 million carries a coupon of 8.5%.
Formerly known as Virgin Blue, Virgin Australia is Australia’s second-largest airline after Qantas; it has the largest fleet of any airline carrying the Virgin flag. The deal adds to a growing list of major airline financings Milbank has handled in 2012-13, spanning more than $6 billion in transactions.
Drew Fine, New York-based chair of Milbank’s Finance group and a regular advisor on large transportation deals, said, “We’re pleased to have played a key role in this breakthrough offering by Virgin Australia, which becomes the first Asia-Pacific carrier to access the global collateralized debt market, and only the fourth non-US airline to do so.”
Milbank Securities partner Arnold Peinado, who co-led the deal team with Mr. Fine, said, “This was an important transaction for Virgin Australia in terms of strengthening its capital base and diversifying its funding sources. Global investor interest in the offering demonstrates widespread confidence in the airline’s business strategy.”
Also working on the transaction were Milbank Tax partner Andrew Walker, ERISA partner Joel Krasnow, Transportation and Space special counsel James Pascale, along with Transportation and Space associates Samir Patel and Evan Bieber, Securities associates Brett Nadritch, Jennifer Beaudry and Meredith Hines and Tax associate Lysondra Ludwig.
Transportation and Space partner Helfried Schwarz and associate Andrew Park represented Natixis, acting through its New York Branch, in its role as liquidity provider and Credit Agricole Corporate and Investment Bank, acting through its New York Branch, as Depositary.
