Bank of China provides a RMB 10 billion loan to Bohai Capital Holding to facilitate Avolon Holdings's acquisition of the aircraft leasing business of CIT Group

Project narrative

On October 6, 2016, Bohai Capital Holding Co., Ltd. (formerly Bohai Leasing Co., Ltd.) — a Chinese aircraft leasing company listed on the Shenzhen Stock Exchange with Chinese conglomerate HNA Group Co., Ltd. via HNA Capital Group Co., Ltd. as its largest shareholder — and Avolon Holding Limited — a Cayman Islands-incorporated Ireland-based aircraft leasing company wholly owned by Global Aircraft Leasing Co., Ltd. (GALC), a Cayman Islands-incorporated special purpose vehicle (SPV) and wholly owned subsidiary of Hong Kong Bohai Leasing Asset Management Corp., Ltd., itself a Hong Kong-incorporated wholly-owned subsidiary of Tianjin Bohai Leasing Co., Ltd., which is wholly owned by Bohai Capital Holding — and Park Aerospace Holdings Limited — a Cayman Islands-incorporated SPV and wholly-owned subsidiary of Avolon Holding Limited — signed a Purchase and Sale Agreement with CIT Group Inc. (CIT) — an American financial services company listed on the New York Stock Exchange — and C.I.T. Leasing Corporation (CIT Leasing) — a wholly-owned subsidiary of CIT Leasing — to purchase CIT Group's commercial aircraft leasing business (also known as CIT Commercial Air). The acquisition targeted the commercial aircraft leasing business and assets owned and operated by CIT, including the Commercial Air Group (including CIT's subsidiaries including C2); CIT would transfer these assets to C2 Aviation Capital, Inc. — a Delaware-incorporated wholly-owned subsidiary of CIT Leasing established in June 2016 and then renamed C2 Aviation Capital LLC — and the issued and outstanding shares of CIT Holdings Canada ULC — an indirect wholly-owned subsidiary of C2, which owns substantially all of the non-U.S. portion of the Commercial Air Business — which then Park Aerospace Holdings would acquire 100% of the equity in C2 from CIT Leasing. The final transaction price was to be determined by adjusting the net assets of C2 on the closing date per a method in the Purchase and Sale Agreement plus a fixed premium of $627,491,703 USD; as of September 30, 2016, the audited book value of net assets of C2 was $6.287 billion USD, so, when including the fixed premium, the price was expected to be approximately $10.057 billion USD (RMB 67.159 billion). In or around 2017, the Hainan Branch of the Bank of China (BOC) issued a loan commitment letter for a RMB 10 billion ($1.47 billion USD) loan to Bohai Capital Holding to facilitate Avolon Holdings's acquisition of the aircraft leasing business of CIT Group. In addition to the BOC loan, in October 2016 Bohai Capital Holding appointed Morgan Stanley and UBS AG to underwrite a $8.5 billion USD syndicated loan to facilitate the acquisition, divided into $3 billion USD of unsecured notes issued on February 3, 2017 and a $5.5 billion USD secured loan with a maturity period of five years and $600 million USD of Bohai Capital Holding's own funds, paid in a deposit to CIT per the Purchase and Sale Agreement. The acquisition was expected to close in the first quarter of 2017. On January 17, 2017, the Committee on Foreign Investment in the United States (CFIUS) issued approval for this acquisition. On February 16, 2017, the board of directors of Bohai Financial Holdings Co., Ltd. approved Avolon Holdings' plans to acquire CIT. On April 3, 2017, CIT completed the CIT Holdings Canada ULC and on April 4, 2017, CIT completed the C2 Aviation Capital LLC, for a final purchase price of $10.4 billion USD. CIT had the fourth largest commercial aircraft leasing fleet in the world and seventh in total value of aircraft held. CIT was listed on the New York Exchange Exchange with financial and leasing assets exceeding $65 million USD. As of September 30, 2016, CIT owned 305 aircraft and had 131 aircraft on order. Avolon had a total of 432 aircraft, so the acquisition would double its fleet. The acquisition made Avolon the world’s third largest aircraft leasing company with a combined fleet, as of December 31, 2016, of 868 aircraft valued at over $43 billion USD (551 aircraft owned, 301 aircraft orders and commitments including 282 new technology aircraft such as 196 Airbus (A320neo, A330neo, and A350), 61 Boeing 737 MAX aircraft, and 25 Boeing 787 aircraft, allowing it to serve 149 customers in 62 customers.