Waha Capital, the Abu Dhabi investment firm that owns a 12.6 per cent stake in the New York-listed AerCap, said it has hedged 12 million shares of the airline leasing company to enable it to use its shares as collateral for a loan.
Using derivative financial instruments, Waha has locked in the price of AerCap shares at between US$37.11 and a maximum of $52.22 per share. That means if the share price of AerCap falls below $37.11 per share it will be compensated on any losses and will benefit from gains on the shares until $52.22 per share. At the same time, Waha said it sold 3 million shares, and together with the hedging transaction this will allow the firm to raise about Dh2 billion in funding.
As a result Waha’s ownership in AerCap has been reduced to 12.6 per cent from 14.1 per cent after the sale, it said.
This is the second hedging Waha has done with its AerCap shares. In September it hedged 15 million shares at a minimum of $42.39 and maximum of $61.23.
Waha said it would use the Dh2bn of funding provided by this latest hedge for new investments to repay debt and general expenses.
AerCap’s shares yesterday were down 1.1 per cent at 10.50am in New York at $42.59. They are down 12.7 per cent from August’s 2014 high. Waha’s shares rose 3.47 per cent to Dh2.98 in Abu Dhabi yesterday.
AerCap said late last year that it had agreed to buy the insurer American International Group’s aircraft leasing business, International Lease Finance Corporation, in a deal valued at more than $5bn.
Under the terms of the transaction, which will increase the size of AerCap’s fleet to more than 1,300 aircraft, AIG will receive $3bn in cash in addition to 97.5 million AerCap shares for its wholly owned subsidiary ILFC.
mkassem@thenational.ae
Follow The National's Business section on Twitters
