Narrative
Full Description
Project narrative
On March 1, 2014, financial close was reached on a deal in which ICBC Financial Leasing Co., Ltd. (ICBC) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement with Tiger Airways Australia Pty Ltd (Tigerair Australia) — an Australian low-cost airline jointly owned by Australian airline holding company Virgin Australia Holdings Pty Ltd (60% stake) and Singapore-based airline Tiger Airways Holdings Limited (40% equity stake) — for one Airbus A320 aircraft. The aircraft had aircraft serial number MSN 6032. The agreement was secured by (i.e. collateralized against) the aircraft. The proceeds of the sale-and-leaseback were to be used by the borrower for general corporate purposes. In February 2020, Virgin Australia Holdings announced it would reduce Tigerair's fleet from 13 to eight, exit five loss-making routes, and close its base in Brisbane base. On March 25, 2020, operations were suspended for the COVID-19 pandemic. At the time, the A320 aircraft on lease from ICBC was still in operations by Tigerair Australia. Virgin Australia requested a bailout loan from the Australian Federal Government, leading it to be placed into voluntary administration in April 2020, with Deloitte, the administrator, attempting to sell it. Bain Capital made the winning bid, wiping out current equity holders, with the sale completed in September 2020. Tigerair was shut down on September 10, 2020.
Staff comments
1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. Under a capital lease (a financial arrangement where the lessee/borrower uses an asset and pays regular installments plus interest to the lender/lessor), rental payments are usually classified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). AidData codes capital leases as loans. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 3. In aviation finance, financial close typically occurs on or around the delivery date of the final aircraft. As financial close occurred on March 1, 2014, the aircraft was almost certainly delivered on or around that date. Thus AidData has coded the actual_implementation_start_date and actual_implementation_completion_date fields as March 1, 2014 and marked the actual_implementation_start_date_estimated? and actual_implementation_completion_date_estimated? fields as True. 4. The commitment date for the sale-and-leaseback agreement is unknown. For the time being, AidData has coded the financial closure date, March 1, 2014, as the commitment date and marked the commitment_date_estimated? field as True.