Commercial passenger aircraft leasing company Avation PLC (LON:AVAP) is in talks to sell off six of its ATR 72 planes.
The sale – which is expected to go through before the end of June – will raise US$31mln in net proceeds for the group.
Importantly for shareholders, the transaction, assuming it goes ahead as planned, is at a price above the company book value.
The potential buyer has also paid a US$3mln deposit, although this is refundable if the deal doesn’t complete for some reason.
Last October, Avation told investors it had received an expression of interest in its 22-strong ATR 72 portfolio, with seven more offers from different buyers coming in soon after.
It went away and considered what would be the best move for the company going forward and decided that selling a smaller portion of the portfolio made most sense.
“This was an extremely positive process for the company, eight existing and new lessors were interested in part or all of the ATR portfolio,” said executive chairman Jeff Chatfield.
“Many of these bidders offered to pay cash above book value. But, in our view selling such a large proportion of our fleet would reduce revenues too dramatically.”
Chatfield added that Avation would redeploy the cash raised in “a sensible manner in the near term”.
The firm said no special dividend was under consideration following the sale of the assets but added that it may pay a dividend “in the ordinary course of business” anyway.
Speaking to Proactive Investors, Avation’s finance director, Richard Wolanski, added: “A letter of intent has been executed for the proposed sale of six ATR 72 aircraft and the sales price agreed…is at a premium to book value.
“The transaction will realise profit and equity to grow the fleet beyond its current size [while] the price achieved provides confidence that the realisable value of the ATR fleet is above book value and also confirms the liquidity of this aircraft type given the amount of interest received.
“The transaction is structured to reduce the impact on current year revenue and earnings and will allow Avation to optimise existing concentration risk and support diversification to new airline customers as capital is redeployed to new fleet assets.
Wolanksi said the company is currently assessing a number of aircraft for acquisition in the near term.
Shares were down 3% to 213p.
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