Flexible and Innovative Financing Model to Promote Sustainable Business Development
[20 March 2015 – Hong Kong] China Aircraft Leasing Group Holdings Limited (“CALC” or the “Group”, stock code: 01848.HK) is pleased to announce that on 17 March 2015, the Group entered into a strategic cooperation framework agreement with Bank of Communications Company Limited (the “Bank of Comm”) in connection with their strategic cooperation on asset securitisation and debenture issuances for 20 aircraft within a term of 3 years. The agreement demonstrates not only the Group’s innovation in business and financing; but also proves the sustainability and growth potential of its business model.
Bank of Communications is one of the top five state-owned banks in China; and is evolving into a multi-market and international integrated financial services provider. Its business covers commercial and investment banking, securities, trust, financial leasing, fund management, insurance, offshore financial services and other fields.
Dr. Mike POON, Chief Executive Officer of CALC, said, “CALC is honored to develop a long-term partnership with the Bank of Comm, the collaboration will foster closer cooperation between both parties and allow the Group to secure various privileged financing services from the Bank. The Group’s execution of securitisation and financing agreements with different financial institutions, once again demonstrates its unique advantages in asset capitalisation and financing channels diversification. We will continue to develop other innovative financing methods actively, in order to further facilitate the Group’s rapid development into a one-stop, full value-chain aircraft solutions provider.”
The aircraft leasing industry is particularly capital intensive, hence the financing capability and cash flow turnover rate are the key factors in determining the success of the business. The Group supports its sustainable growth through long-term bank borrowings, realisation of lease receivables and various financing channels. Securitisation takes place when the Group sells the long-term finance lease receivables to independent third parties; the net proceeds will be recognised as income after deducting the transaction costs and taxes. The purpose is to realise the lease receivables in advance to transfer leasing risk, lower financial leverage, enhance cash flow and accelerate business development (e.g. purchase more aircraft to expand its fleet size and repay bank loans). At the same time, sufficient funds will support the Group’s business expansion, and solidify its foundation for new ventures such as aircraft disassembly.
