AERGO CAPITAL, the aircraft leasing company owned by businessman Denis O'Brien, has acquired a South African aviation leasing business for a total of $175 million (€110 million).
The transaction with Imperial Holding, an investment company listed on the Johannesburg stock exchange, will see Aergo take control of 33 aircraft in its Safair aircraft-leasing division and lease a further nine planes from the parent company.
Safair, whose headquarters is at Johannesburg International Airport, also has operations in Cape Town, Singapore and Britain.
The transaction marks a drive to expand Aergo by Mr O'Brien, whose other interests include Caribbean mobile phone company Digicel, radio company Communicorp and a 25 per cent stake in Independent News Media.
The consideration includes payment of $55.8 million and a further payment of 509.8 million rand (€41.78 million) to Imperial. The €33.1 million balance will go to its joint venture partner in Safair's 50 per cent-owned subsidiary Safair Lease Finance.
Mr O'Brien owns some 80 per cent of Aergo, a company whose enterprise value is understood to have risen to $250 million at the end of 2007 from $200 million a year earlier.
Its enterprise value is likely to increase significantly as a result of the Safair transaction.
Included in the deal are five Boeing 737-800 passenger aircraft, six Boeing 737-400 passenger aircraft, six Boeing 737-200 passenger aircraft and five Airbus A300-B4 freighter aircraft.
Aergo is leasing nine Lockheed Hercules aircraft from Imperial for a maximum period of five years. "Imperial has a right to put the [Hercules] aircraft to Aergo at regular intervals over the period at pre-agreed prices," Imperial said.
The deal is subject to approval by regulators, financiers and lease counterparties and it is scheduled to close in September. In light of a memorandum of understanding signed last year between Aergo and Imperial, the transaction took effect in its books of account last November.
However, the deal was made public only this week following final agreement on the terms of the transaction.
Aergo will pay Imperial $35 million in September and pay a further $20.8 million by October 2012. "The rand-based consideration will be received in various tranches over a five-year period subsequent to the completion date," Imperial said in a statement.
In its 2007 books of account, Imperial made a provision for a loss of 848 million rand arising from its withdrawal from the business. "The losses mainly stemmed from lower realisation values on aircraft, goodwill and deferred tax asset write-offs, and provisions for anticipated losses on the sale of aircraft spares," Imperial said.
In a separate transaction last February, Imperial realised €22 million from the sale of a Dublin-based air freight business, Air Contractors, to a subsidiary of Belgian financial services firm Compagnie Maritime Belge.
