Announcement of New Revolving Credit Facility

Rhea-AI Summary

Willis Lease Finance (NASDAQ: WLFC) has secured a new $1.0 billion five-year revolving credit facility, replacing its existing $500.0 million agreement. The new facility, administered by Bank of America, includes an option to increase commitments by an additional $250.0 million. The credit facility will be available until October 31, 2029, with loans bearing interest based on Term SOFR plus margin. The agreement requires WLFC to maintain specific financial ratios, including a Consolidated Interest Coverage Ratio of no less than 2.25:1.00 and varying Consolidated Leverage Ratios through 2025.

Positive

• Doubled credit facility capacity from $500M to $1.0B
• Option to increase facility by additional $250M
• Extended maturity to October 31, 2029
• Enhanced financial flexibility for growth initiatives

Negative

• New debt facility increases potential leverage exposure
• Stricter financial covenants requiring specific ratio maintenance
• Additional fees including unused line fee and other lender charges

Insights

Financial Analyst

The new $1.0 billion revolving credit facility represents a significant financial milestone, doubling the previous $500 million facility. The expanded borrowing capacity and potential for an additional $250 million increase provides substantial financial flexibility for WLFC's growth initiatives. The extended maturity to 2029 and improved financial covenants demonstrate strong lender confidence.

The floating rate structure based on Term SOFR plus margin aligns with current market standards. The required financial covenants - maintaining a Consolidated Interest Coverage Ratio above 2.25x and Consolidated Leverage Ratio below 4.25x (reducing to 4.00x) - are reasonable for the aircraft leasing industry and provide adequate operational flexibility.

This enhanced liquidity positions WLFC well to capitalize on growth opportunities in the commercial aircraft engine leasing market, particularly as the aviation industry continues its recovery trajectory.

COCONUT CREEK, Fla., Nov. 04, 2024 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) (“WLFC” or the “Company”) today reported that on October 31, 2024, the Company entered into a new, $1.0 billion, five-year, revolving credit facility (the “Credit Agreement”) among WLFC, certain wholly-owned subsidiaries of WLFC, as guarantors, the lenders party thereto from time to time (the “Lenders”), and Bank of America, N.A., as administrative agent, collateral agent, swing line lender, and letter of credit issuer. The Credit Agreement replaced the existing $500.0 million revolving credit agreement, dated as of June 7, 2019 (as amended and restated, the “Existing Credit Agreement”), among WLFC, the lenders party thereto from time to time and MUFG Bank, Ltd. as agent.

Under the Credit Agreement, WLFC may request an additional increase of the aggregate commitments from time to time up to an aggregate additional $250.0 million from the lenders, who may elect to make such increase available, upon the satisfaction of certain conditions.

Proceeds from the revolving credit facility may be used for general corporate purposes. The credit facility will be available on a revolving basis until October 31, 2029, and WLFC may request to extend the maturity, subject to lender approval.

Loans under the Credit Agreement will bear interest based on a floating rate (Term SOFR) plus a margin. In addition, WLFC has agreed to pay Bank of America, N.A. an unused line fee, quarterly in arrears, as well as pay other fees to Bank of America, N.A. and to the Lenders as separately agreed upon in writing.

The Credit Agreement also requires WLFC to maintain, as of the last day of each Measurement Period (as defined in the Credit Agreement), commencing with the last day of the fiscal quarter ending December 31, 2024, a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of no less than 2.25 to 1.00, and a Consolidated Leverage Ratio (as defined in the Credit Agreement ) of no greater than 4.25 to 1.00 through June 30, 2025 and no greater than 4.00 to 1.00 thereafter.

“We are very excited to have closed our new, expanded revolving credit facility,” said Scott B. Flaherty, the Company’s Chief Financial Officer. “Our new facility will provide incremental capital to support the growth we are experiencing across the WLFC platform.”

Willis Lease Finance Corporation

Willis Lease Finance Corporation (“WLFC”) leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers worldwide. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services through Willis Asset Management Limited, as well as various end-of-life solutions for engines and aviation materials provided through Willis Aeronautical Services, Inc. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport FBO and ground and cargo handling services.

Except for historical information, the matters discussed in this press release contain forward-looking statements that involve risks and uncertainties. Do not unduly rely on forward-looking statements, which give only expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include, but are not limited to: the effects on the airline industry and the global economy of events such as war, terrorist activity and pandemics; changes in oil prices, rising inflation and other disruptions to world markets; trends in the airline industry and our ability to capitalize on those trends, including growth rates of markets and other economic factors; risks associated with owning and leasing jet engines and aircraft; our ability to successfully negotiate equipment purchases, sales and leases, to collect outstanding amounts due and to control costs and expenses; changes in interest rates and availability of capital, both to us and our customers; our ability to continue to meet changing customer demands; regulatory changes affecting airline operations, aircraft maintenance, accounting standards and taxes; the market value of engines and other assets in our portfolio; and risks detailed in the Company’s Annual Report on Form 10-K and other continuing reports filed with the Securities and Exchange Commission.

CONTACT:	Scott B. Flaherty
	EVP & Chief Financial Officer
	561.413.0112

FAQ

What is the size of WLFC's new revolving credit facility?

WLFC's new revolving credit facility is $1.0 billion, with an option to increase by an additional $250.0 million.

When does WLFC's new credit facility mature?

The credit facility will be available until October 31, 2029, with an option to request extension subject to lender approval.

What financial covenants must WLFC maintain under the new credit facility?

WLFC must maintain a Consolidated Interest Coverage Ratio of no less than 2.25:1.00 and a Consolidated Leverage Ratio of no greater than 4.25:1.00 through June 2025, reducing to 4.00:1.00 thereafter.

Who is the administrative agent for WLFC's new credit facility?

Bank of America, N.A. serves as the administrative agent, collateral agent, swing line lender, and letter of credit issuer for the new credit facility.