Onex to pay $165m for BBAM 50% stake

Canadian private equity group Onex Corporation has agreed to pay $165 million for a 50 per cent stake in aircraft management company BBAM, which has shareholders in Dublin, including Aer Lingus chairman Colm Barrington.

The Canadian company has also agreed to invest $20 million in new shares in Fly Leasing, a Dublin-based and New York-listed aircraft leasing company related to BBAM and led by Mr Barrington.

Onex is buying 35 per cent of San Francisco-based BBAM from management, including Mr Barrington, and 15 per cent from Fly. BBAM, which has about 20 staff in Dublin, manages Fly, with Mr Barrington seconded to the aircraft leasing company as its chief executive.

Onex is paying $115.5 million to acquire the BBAM management’s 35 per cent shareholding and $49.5 million to Fly for its 15 per cent stake. BBAM’s management will continue to own 50 per cent of the management company.

$5m investment

In addition to Onex investing in Fly, BBAM’s management has agreed to invest $5 million in new shares in the listed company. Onex will have a 6 per cent direct stake in Fly as a result of this transaction.

These deals mean Fly will receive an additional $75 million in gross proceeds.

The transactions are expected to close by the end of 2012 subject to certain conditions and approvals.

Mr Barrington yesterday told The Irish Times the transactions were a “good deal” and would boost Fly’s balance sheet to allow it to continue to grow. He declined to comment on his personal shareholding in BBAM, the former aircraft management arm of the now defunct Australian investment group Babcock Brown.

Fly owns 110 aircraft, which are externally managed by BBAM. These are on long-term operating leases to 53 airlines around the world. BBAM has a portfolio of 450 aircraft, including the Fly planes. This is valued at $13 billion.

Mr Barrington said Fly recently secured a borrowing facility of $250 million. When added to the $75 million in new equity, the company has significant firepower to acquire new aircraft. Onex has $14 billion in assets under management. Its shares trade on the Toronto Stock Exchange.