8-K: Willis Lease Finance Subsidiary Closes $596 Million Fixed Rate Notes Offering to Fund Aircraft Engine Acquisitions

Willis Lease Finance Corporation's wholly-owned subsidiary, Willis Engine Structured Trust VIII (WEST), has successfully closed a $596 million fixed rate notes offering to finance the acquisition of 62 aircraft engines and two airframes.

Summary

• Willis Lease Finance Corporation (WLFC) announced that its wholly-owned subsidiary, Willis Engine Structured Trust VIII (WEST), closed an offering of $596,000,000 in aggregate principal amount of fixed rate notes on June 18, 2025.
• The offering consisted of two series: Series A Notes totaling $524,000,000 with a fixed coupon of 5.582% and Series B Notes totaling $72,000,000 with a fixed coupon of 6.070%.
• Both series of notes were issued at a price of 99.99721% and 99.99711% of par, respectively.
• The notes have an expected maturity of approximately six years, an expected weighted average life of 5.1 years, and a final maturity of 25 years.
• The notes are secured by WEST's direct and indirect ownership interests in a portfolio of 62 aircraft engines and two airframes, which WEST will acquire from Willis.
• Net proceeds will primarily be used to pay issuance fees and expenses, deposit initial amounts in reserve accounts for security deposits and maintenance, and pay Willis periodically over a 270-day delivery period for the acquired assets.
• Willis will apply any net proceeds it receives for general corporate purposes.
• The offering was significantly oversubscribed, with Series A Notes seeing 3.60x (gross) and 5.10x (avail) subscription, and Series B Notes seeing 7.15x (gross) and 13.00x (avail) subscription.
• Willis will act as servicer and administrative agent for WEST, receiving monthly fees of 8.0% senior rent-based and 3.5% subordinated rent-based on net rents, plus 3.0% of net proceeds from asset sales as servicer, and 2.0% of aggregate net rents as administrative agent.

Sentiment

Score: 8

Explanation: The successful closing of a significant, oversubscribed debt offering is a strong positive indicator, demonstrating market confidence and providing capital for strategic asset acquisitions, which strengthens the company's financial position and future growth prospects.

Positives

• Successful closing of a significant $596 million fixed rate notes offering, demonstrating strong market confidence.
• The offering was substantially oversubscribed, with Series A Notes subscribed 3.60x (gross) and 5.10x (avail), and Series B Notes subscribed 7.15x (gross) and 13.00x (avail), indicating robust investor demand.
• The financing provides capital to acquire 62 aircraft engines and two airframes, strengthening the company's asset base and leasing portfolio.
• The structured financing arrangement through WEST segregates assets, providing security for noteholders while allowing Willis to continue managing the assets and receiving fees.

Risks

• The airline industry and global economy are subject to risks from events such as war, terrorist activity, and pandemics.
• Changes in oil prices, rising inflation, and other disruptions to world markets could impact operations.
• Ability to capitalize on airline industry trends, including growth rates and economic factors, is uncertain.
• Risks are associated with owning and leasing jet engines and aircraft.
• The company's ability to successfully negotiate equipment purchases, sales, and leases, collect outstanding amounts, and control costs and expenses is crucial.
• Changes in interest rates and the availability of capital for both the company and its customers pose risks.
• The company's ability to continue to meet changing customer demands is a factor.
• Regulatory changes affecting airline operations, aircraft maintenance, accounting standards, and taxes could impact the business.
• The market value of engines and other assets in the company's portfolio can fluctuate.

Future Outlook

The document contains standard forward-looking statements indicating that actual results may differ materially from expectations due to various factors including global economic conditions, industry trends, interest rate changes, regulatory changes, and market values of assets. The net proceeds from the notes offering will be applied to acquire assets over a 270-day delivery period, supporting future leasing activities.

Management Comments

• Willis Lease Finance Corporation, through its wholly-owned subsidiary WEST, has successfully completed the previously announced offering of $596.0 million in fixed rate notes, which will be secured by a portfolio of 62 aircraft engines and two airframes.

Industry Context

Willis Lease Finance Corporation is a leading lessor of commercial aircraft engines and a global provider of aviation services. This successful debt offering allows the company to expand its core business by acquiring additional aircraft engines and airframes, reinforcing its position in the aviation leasing market. The strong investor demand for the notes suggests confidence in the aviation sector's recovery and the stability of asset-backed financing in this industry.

Corporate Governance

Related Party Transactions

• WEST, a wholly-owned subsidiary of Willis, will acquire 62 aircraft engines and two airframes from Willis pursuant to an asset purchase agreement.
• Willis will act as the servicer of the assets of WEST and its subsidiaries, receiving monthly fees equal to a senior rent based fee of 8.0% and a subordinated rent based fee of 3.5% of aggregate net rents, plus a fee of 3.0% of net proceeds from asset sales.
• Willis will act as the administrative agent of WEST and its subsidiaries, receiving monthly fees equal to 2.0% of the aggregate net rents received by WEST on the related assets.

Stakeholder Impact

• Shareholders: The successful financing strengthens the company's balance sheet and provides capital for growth, potentially leading to increased asset base and future earnings.
• Creditors (Noteholders): The notes are secured by a portfolio of aircraft engines and airframes, and the indenture includes covenants designed to protect their investment.
• Employees: Continued business expansion through asset acquisition may support job stability and growth.
• Customers (Airlines): The increased asset base allows Willis to offer more leasing options, potentially benefiting airline customers.

Next Steps

• WEST will acquire 62 aircraft engines and two airframes from Willis over a specified 270-day delivery period.
• Willis will apply the net proceeds it receives from the asset sales for general corporate purposes.

Key Dates

Recommendation

Keywords

Willis Lease Finance Corporation, WLFC, fixed rate notes, debt offering, aircraft engines, airframes, aviation leasing, asset-backed securities, SEC filing, commercial aircraft, structured finance