8-K: Willis Lease Finance Corporation Prices $596 Million Fixed Rate Notes Secured by Aircraft Engine Portfolio

Willis Lease Finance Corporation's subsidiary, Willis Engine Structured Trust VIII, has successfully priced $596 million in fixed-rate notes, backed by a portfolio of aircraft engines and airframes.

Summary

• Willis Lease Finance Corporation (WLFC) and its direct, wholly-owned subsidiary, Willis Engine Structured Trust VIII (WEST), entered into a Note Purchase Agreement on June 5, 2025.
• The agreement provides for the issuance and sale of $524,000,000 in aggregate principal amount of Series A Fixed Rate Notes and $72,000,000 in aggregate principal amount of Series B Fixed Rate Notes, totaling $596,000,000.
• The Notes will be secured by WEST's direct and indirect ownership interests in a portfolio comprising 62 aircraft engines and two airframes.
• The Series A Notes have a fixed coupon of 5.582% and are priced at 99.99721% of par, while the Series B Notes have a fixed coupon of 6.070% and are priced at 99.99711% of par.
• Both series of Notes have an expected maturity of approximately six years, an expected weighted average life of 5.1 years (based on certain modeling assumptions), and a final maturity of 25 years.
• The issuance and sale of the Notes are part of an offering scheduled to close on June 18, 2025, subject to the satisfaction of customary conditions precedent.
• The Notes are being offered only to qualified institutional buyers under Rule 144A and outside the United States to non-U.S. persons in compliance with Regulation S of the Securities Act of 1933.

Sentiment

Score: 8

Explanation: The successful pricing of a substantial $596 million debt offering is a highly positive development, demonstrating strong market access and providing significant capital for the company's operations and strategic growth initiatives.

Positives

• Successful pricing of a significant $596 million fixed-rate notes offering, indicating strong market access and investor confidence.
• The notes are secured by a substantial portfolio of 62 aircraft engines and two airframes, providing robust collateral for the debt.
• The capital raise provides substantial funding for the company's operations and strategic initiatives, including its core leasing activities and potential future ventures like Willis Sustainable Fuels.

Risks

• The transaction is subject to the satisfaction of a variety of customary conditions precedent, and the Company cannot give assurance that the transaction will close on the scheduled date (June 18, 2025) or at all.
• Forward-looking statements involve risks and uncertainties, including the effects on the airline industry and global economy from events such as war, terrorist activity, the COVID-19 pandemic, changes in oil prices, rising inflation, and other disruptions to world markets.
• Risks associated with owning and leasing jet engines and aircraft, including the ability to successfully negotiate equipment purchases, sales, and leases, collect outstanding amounts due, and control costs and expenses.
• Changes in interest rates and the availability of capital, both for the company and its customers, could impact financial performance.
• Regulatory changes affecting airline operations, aircraft maintenance, accounting standards, and taxes pose potential risks.
• The market value of engines and other assets in the company's portfolio could fluctuate, impacting asset-backed financing and overall financial health.

Future Outlook

The company continues its focus on leasing large and regional spare commercial aircraft engines, auxiliary power units, and aircraft, integrated with engine and aircraft trading, lease pools, and asset management services. Willis Sustainable Fuels intends to develop, build, and operate projects aimed at decarbonizing aviation. The successful pricing of these notes provides capital to support these ongoing and future strategic initiatives.

Management Comments

• Scott B. Flaherty, Executive Vice President & Chief Financial Officer, is listed as the contact for the news release.

Industry Context

Willis Lease Finance Corporation operates as a leading lessor of commercial aircraft engines and a global provider of aviation services. This debt offering is a common financing strategy within the aviation leasing industry, allowing companies to leverage their asset portfolios to secure capital for growth, acquisitions, and general corporate purposes, reflecting ongoing demand for aircraft and engine financing.

Related Party Transactions

• Willis Engine Structured Trust VIII (WEST) is a direct, wholly-owned subsidiary of Willis Lease Finance Corporation.
• WEST will acquire the portfolio of 62 aircraft engines and two airframes from WLFC or its other subsidiaries pursuant to an asset purchase agreement, which will then secure the Notes.

Stakeholder Impact

• Shareholders: The successful capital raise strengthens the company's financial position, potentially enabling future growth and stability.
• Creditors (Note Purchasers): They are investing in asset-backed notes with fixed coupons, secured by a portfolio of aviation assets.
• Customers: Enhanced financial flexibility may allow the company to expand its leasing fleet and service offerings.

Next Steps

• The planned closing of the notes issuance is scheduled for June 18, 2025, subject to customary conditions precedent.

Key Dates

Keywords

Aircraft engine leasing, Fixed rate notes, Debt offering, Aviation services, Capital raise, SEC filing, Rule 144A, Regulation S, Asset-backed securities, Commercial aircraft engines, Willis Lease Finance Corporation