Aircraft Lease Securitisation II Limited ("ALS II") is a special purpose limited liability company incorporated on May 22, 2008 under the laws of Bermuda to purchase and own a portfolio of aircraft. ALS II is resident in Ireland for tax purposes.
On June 26, 2008 (the "Initial Closing Date") ALS II issued Class A-1 Floating Rate Asset Backed Notes Series 2008-1 (the "Class A-1 Notes") and Class A-2 Floating Rate Asset Backed Notes Series 2008-1 (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Initial Class A Notes") pursuant to a trust indenture dated as of the Initial Closing Date between ALS II, Deutsche Bank Trust Company Americas as cash manager, operating bank and trustee, and Crédit Agricole Corporate and Investment Bank, formerly known as Calyon ("Crédit Agricole") as initial primary liquidity facility provider and class A-1 funding agent (the "Indenture"). On the Initial Closing Date, each of the Class A-1 Notes and the Class A-2 Notes had an outstanding principal amount of zero. The principal amounts of the Class A-1 Notes were increased upon advances being made pursuant to a funding agreement dated as of the Initial Closing Date (the "Funding Agreement"), among ALS II, Crédit Agricole and certain commitment holders who held Class A-1 Notes (the commitment holders from time to time, the "Class A-1 Commitment Holders"). Advances were made in connection with the delivery of aircraft, as further described below, with the initial advances being made no earlier than the Initial Delivery Date (as defined below). The aggregate amount of advances made under the Funding Agreement was $977.1 million. The final aircraft was delivered on May 20, 2010 and no further Advances are permitted to be made under the Funding Agreement. The aggregate principal balance of the Class A-1 Notes and the Class A-2 Notes, taken together, will not exceed the amount of advances made pursuant to the Funding Agreement. Class A-1 Notes may be exchanged for interests in Class A-2 Notes subject to certain restrictions.
ALS II issued an aggregate principal amount of $392.2 million Class E-1 Fixed Rate Deferrable Interest Asset Backed Notes Series 2008-1 (the "Class E-1 Notes") to AerVenture Leasing 1 Limited ("AerVenture Leasing"), including (i) $9.3 million of Class E-1 Notes issued on the Initial Closing Date to AerVenture Leasing, (ii) each Class E-1 Note issued to AerVenture Leasing in connection with the delivery of each aircraft to ALS II, including Class E-1 Notes in an aggregate amount of $382.9 million issued in connection with aircraft deliveries. Further Class E-1 Notes may be used from time to time to the Class E-1 Noteholder equal to the amount of expenses paid by such person pursuant to the Resale Agreement.
The proceeds of the Class E-1 Notes issued to AerVenture Leasing on the Initial Closing Date were used to pay expenses and fees owed by ALS II during the period between the Initial Closing Date and the Initial Delivery Date (being the first advance date under the Funding Agreement) and were available for payment of certain obligations of ALS II between the Initial Delivery Date and the first date on which interest on the Initial Class A Notes was due after the Initial Delivery Date, which was October 15, 2009. Of these proceeds which were held for the purpose of the initial expenses but were unused, $2.6 million was repaid to the Class E-1 Noteholder in accordance with the Indenture. The proceeds of the advances made by the Class A-1 Commitment Holders pursuant to the Funding Agreement and the issuance of a portion of the Class E-1 Notes were used by ALS II to indirectly purchase 30 aircraft and related leases from AerVenture Leasing by purchasing 100% of the ownership interest in (a) a holding company that owns 100% of the ownership interest in entities each owning an aircraft or leasing one or more aircraft and (b) entities that each own an aircraft, in each case pursuant to a purchase agreement dated as of the Initial Closing Date (the "Purchase Agreement"). After the thirtieth aircraft was purchased, the Class A-1 Commitment Holders made an advance of $39.6 million under the Funding Agreement, the proceeds of which were used to redeem a portion of the Class E-1 Notes held by AerVenture Leasing.
At the Initial Closing Date, AerVenture Leasing, as at such time a wholly owned subsidiary of AerVenture, held 5% of the shares in ALS II, with the other 95% held by a charitable purpose trust organized under the laws of Bermuda. On February 24, 2011, AerVenture transferred its interest in the shares of AerVenture Leasing to AerCap Ireland Limited ("AerCap Ireland"), a wholly owned subsidiary of AerCap, and on February 25, 2011, AerVenture Leasing transferred its Class E-1 Note holdings and shares in ALS II to AerCap Ireland. AerCap will continue to consolidate the financial results of ALS II with the financial results of AerCap.
Service Providers to ALS II Group
AerCap Ireland acts as the Primary Servicer to ALS II Group. AerCap Cash Manager II Limited, a subsidiary of AerCap Ireland, acts as Insurance Servicer and Financial Administrative Agent. AerCap Administrative Services Limited, another subsidiary of AerCap Ireland, acts as Primary Administrative Agent. Deutsche Bank Trust Company Americas acts as Cash Manager. AerCap Ireland and its own subsidiaries described in this paragraph together with the Cash Manager are responsible for all financial reporting obligations and liability management under the terms of the various service provider agreements. Deutsche Bank Trust Company Americas acts (for the holders of the Notes) as Trustee and Security Trustee.
The Class A-2 notes are admitted to the official list of the Irish Stock Exchange and to trade on the Global Exchange Market. There can be no assurance that this admission will be maintained. The Class A-1 notes are not, and are not expected to be, listed on any stock exchange.
Payments on Notes
Cash received by ALS II, derived primarily from the leases of the aircraft owned by the ALS II Group, will be available to make payments in accordance with the Indenture of amounts due in respect of the obligations of the ALS II Group. Payments of interest on and principal of the Notes, as well as the other obligations of the ALS II Group, are made according to a predefined priority of payments set forth in the Indenture. Payments of interest on the Initial Class A Notes will be made after payment of any amounts due and owing in respect of various expenses identified in the Indenture, including, without limitation, taxes, obligations to lessees and fees to various service providers.
Calyon has provided a liquidity facility to ALS II which may be drawn upon, subject to certain conditions, to pay certain expenses, senior hedge payments, fees owed to the Class A-1 Commitment Holders and interest on the Initial Class A Notes to the extent of available funds thereunder.