Dubai Aerospace secures up to $800m in funding as it mulls 400-jet order

DAE signed a deal for an unsecured revolving credit facility to diversify its funding sources

Dubai Aerospace Enterprise's merged platform has completed 108 aircraft transactions during the first half. Courtesy of DAE Capital

Dubai Aerospace Enterprise, the Middle East’s biggest aircraft lessor with a $14 billion (Dh51bn) fleet, signed a deal for an unsecured revolving $480 million credit facility with local and regional banks as it seeks to diversify its sources of funding.

The four-year deal can be extended to up to $800m and has both Islamic and conventional tranches, DAE said in an emailed statement on Monday. Al Ahli Bank of Kuwait, First Abu Dhabi Bank and Noor Bank helped arrange the facility.

The deal “adds to the unsecured component of our liquidity profile, increasing our unsecured revolving credit facilities to $1.125bn to $1.445bn depending on the final committed amount of this facility,” Firoz Tarapore, chief executive of DAE said.

The state-owned company is in talks with Airbus and Boeing for an order of 400 narrow-body jets and may expand its portfolio through the acquisition of another lessor if there’s no agreement with the planemakers. DAE is growing its fleet further after it acquired Dublin-based lessor AWAS last year in a deal that propelled it to the top ranks of global aircraft lessors, swelling its portfolio to nearly 400 planes.

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DAE is also considering the issuance of a $500m sukuk and could tap the market either later this year or in 2019, depending on market appetite, Tarapore said in April. In 2017, DAE raised $2.3bn in senior bonds split across three tranches in the US to fund its acquisition of Awas.

On a pro forma basis as of December 2017, if the new facility is fully drawn and if the proceeds are used to pay down secured indebtedness, DAE’s percentage of unsecured debt would increase from 26 per cent to reach a range of 31 per cent to 34 per cent, Tarapore said.

The facility will support DAE’s purchase of the aircraft, spare engines and pre-delivery financing that it intends to dispose of or refinance, Al Ahli Bank of Kuwait said in an emailed statement.

Legal council for the lenders were Clyde& Co and for the borrowers Clifford Chance.

DAE’s leasing and engineering divisions serve more than 125 airline customers from its seven locations in Dubai, Dublin, Amman, Singapore and the US, according to its website.