Prescience Point Capital Management Releases Positive Findings Related To AerSale Corporation's Public Warrants

Rhea-AI Summary

On November 8, 2021, Prescience Point Capital Management published an open letter highlighting positive findings on AerSale Corporation (ASLE) warrants. The firm believes AerSale shares could double within a month due to catalysts like FAA approval and a significant increase in FY 2021 guidance expected after the upcoming conference call. Prescience Point values AerSale shares at $47 today, projecting a rise above $100 in two to three years. They clarify that the company cannot redeem public warrants before October 1, 2022, indicating they are undervalued and hold potential time premium.

Positive

• AerSale shares could double within a month due to FAA approval and increased guidance.
• Current share value estimated at $47 with a projection above $100 in 2-3 years.
• Public warrants restricted from redemption until October 1, 2022, indicating they are undervalued.

Negative

• Potential civil and criminal liability if warrants are redeemed before the legal date.
• Confusion among investors regarding the timing of public warrant redemptions.

BATON ROUGE, La., Nov. 8, 2021 /PRNewswire/ -- Prescience Point Capital Management, ("Prescience Point"), a research-focused, catalyst-driven investment firm that seeks to earn superior risk-adjusted returns uncorrelated to the broader market, today issued the following open letter to investors regarding new, positive findings related to the publicly-traded warrants of AerSale Corporation (Nasdaq: ASLE) ("AerSale" or "the Company").

Dear Fellow AerSale Shareholders, Warrant Holders and Other Interested Parties:

In a research report published on October 27, 2021, Prescience Point concluded that AerSale is one of the most undervalued public companies we have ever seen. We continue to believe that the Company's shares could double within a month due to several near-term catalysts, which include FAA approval and an initial order for AerAware, the Company's game-changing wearable heads up display product, as well as our view that the Company will have to significantly raise its FY 2021 guidance in connection with its third quarter conference call, scheduled for Tuesday, November 9, 2021. 

Based on conservative assumptions, we believe AerSale shares are worth $47 today, and are likely to exceed $100 within the next two to three years.

We believe at the moment there is confusion among investors regarding when AerSale will be able to redeem its public warrants (Nasdaq: ASLEW). Our research over the past few weeks has provided clarity on this matter and shows, rather definitively, that AerSale is restricted by law from redeeming its public warrants before October 1, 2022. This is extremely positive for AerSale's public warrant holders, not only because it means that the warrants will remain outstanding for nearly one year or more, but also because it means that the warrants are currently undervalued.  At the moment, the Company's public warrants trade closely in-line with their intrinsic value, which means that the market is incorrectly assigning zero time premium to them. We believe these warrants should include a time premium of at least $1.00.

Our conclusions are based on the following key findings:

• The CARES Act included provisions for the Department of Treasury ("Treasury") to provide payments to certain contractors in the airline industry to be exclusively used for the continuation of payment of employee wages, salaries, and benefits. 
• During the pandemic, AerSale has received payroll support from the Treasury on three separate occasions.  The Company received $16.4 million on June 9, 2020 under the Payroll Support Program ("PSP1"), $5.5 million on March 3, 2021 under the Payroll Support Program Extension ("PSP2") and $5.5 million on March 11, 2021 under the American Recovery Plan ("ARP"), which authorized the Treasury to provide additional payroll support ("PSP3") to contractors that received financial assistance under PSP2.
• As part of the PSP3 agreement and ARP, AerSale was required to agree that "through September 30, 2022…neither the...contractor, nor any affiliate thereof, purchases, in any transaction, an equity security of the air carrier or contractor, or of any direct or indirect parent company of the air carrier or contractor, that, in either case, is listed on a national securities exchange."
• As per 15 U.S.C. 78c(a), for the purposes of the PSP1, PSP2 and PSP3, "equity securities" is defined as "any stock or similar security; or any security future on any such security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the Commission shall deem to be of similar nature and consider necessary or appropriate, by such rules and regulations as it may prescribe in the public interest or for the protection of investors, to treat as an equity security."
• As noted in the FAQs issued for PSP2, there are very limited instances excluded from the buyback provisions of PSP1, PSP2, and PSP3, and none of these exclusions are applicable to AerSale's current situation.
• Although some public companies that received financial assistance under the CARES Act have repurchased shares and redeemed public warrants, these companies received financial assistance under the Paycheck Protection Program ("PPP") which, unlike the PSP, does not impose explicit limitations on the repurchase of equity securities.

Based on the above, we cannot imagine a scenario where a warrant redemption by AerSale would be allowed by the PSP statutes or the PSP agreements prior to October 1, 2022. Under each statute it is clear that failure to comply with the provisions could result in the "clawback of any financial assistance provided upon failure" by a recipient to comply with the buyback provisions.

However, more concerning is the potential for civil and criminal liability relating to a warrant redemption by AerSale or an affiliate prior to October 1, 2022.  By signing PSP1, PSP2 and PSP3, AerSale acknowledged that a materially false, fictitious, or fraudulent statement (or concealment or omission of a material fact) in connection with this Agreement may result in administrative remedies as well as civil and/or criminal penalties.  The Treasury was also very clear in each PSP agreement that it would not hesitate to refer any noncompliance or any allegations of fraud, waste, or abuse to the Treasury Inspector General.

We hope that you find the information included herein about AerSale's public warrants useful and instructive.  Should the need arise, we will provide further updates to the public on this and other matters related to AerSale on our website and Twitter account.

Warm Regards,

Eiad Asbahi, CFA

Prescience Point Capital

Prescience Point has a long position in shares and warrants of AerSale and stands to benefit if the share price rises. 

About Prescience Point Capital Management
Prescience Point Capital Management is a research-focused, catalyst-driven investment firm that seeks to earn superior risk-adjusted returns uncorrelated to the broader market. Unlike traditional investment strategies, we are unconstrained and can opportunistically invest globally, across asset classes, industry verticals and capital structures. Whether investing in misunderstood distressed assets, creating value through shareholder activism, or uncovering fraud, we seek to capitalize on opportunities that others miss or fall outside the rigid mandates of most investment firms.

Our uniqueness resides in our unconventional thinking, deep research, intellectual curiosity and willingness to go against the prevailing wisdom.

The firm was founded by investor Eiad Asbahi in 2009 and is headquartered in Baton Rouge, LA.

For more information please visit www.presciencepoint.com or follow @PresciencePoint.

Prescience Investment Group, LLC is a member of the Financial Industry Regulatory Authority, CRD number 152721.

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SOURCE Prescience Point Capital Management

FAQ

What are the recent findings regarding AerSale Corporation's public warrants (ASLE)?

Prescience Point Capital Management reported that AerSale's public warrants are undervalued and cannot be redeemed before October 1, 2022.

What factors could lead to a rise in AerSale's stock price?

Factors include FAA approval and an increase in FY 2021 guidance expected during the upcoming conference call.

What is the current estimated value of AerSale shares?

Prescience Point estimates AerSale shares to be worth $47 today with a potential rise above $100 within two to three years.

What are the implications of the FAA approval for AerSale's business?

FAA approval is seen as a catalyst that could significantly boost AerSale's stock price.

What risks are associated with the redemption of AerSale's public warrants?

There are potential civil and criminal liabilities for redeeming warrants before the legally allowed date of October 1, 2022.