Stratos Aircraft Management’s $553.6 Million Aircraft Lease ABS Transaction


Milbank advised JP Lease Products and Services and Stratos Aircraft Management on a first-of-its-kind aircraft lease ABS transaction.

The ‘JOL AIR 2019-1’ deal, comprising 15 aircraft, is the first aircraft lease ABS to include “Japanese operating lease” (“JOL”) structures.

The deal is JP Lease’s first ABS, and Stratos’ first ABS deal as servicer. It is comprised of a $456 million Class A debt tranche (rated ‘A’ by Kroll Bond Rating Agency (“KBRA”) and Standard & Poor’s (“S&P”)), a $73.8 million Class B debt tranche (rated at “BBB” by KBRA and S&P) and an unrated $23.8 million Class C debt tranche. Equity in the transaction is provided by Japanese investors via the JOL structure. Goldman Sachs acted as lead structuring agent and lead left bookrunner, while Deutsche Bank was joint structuring agent and joint lead bookrunner. Natixis’ New York branch was the liquidity facility provider.

In addition to the JOL structuring, the deal included a number of innovative features, such as a 100% cash sweep at the bottom of the waterfall (for the benefit of the Class A notes and Class B notes) before the equity is paid.

All 15 aircraft were transferred into the ABS on the closing date, with proceeds repaying a secured warehouse facility (on which Milbank represented JP Lease and Stratos).

Goldman Sachs acted as lead structuring agent and lead left bookrunner. Deutsche Bank acted as Joint structuring agent and joint lead bookrunner. Natixis acted as joint lead bookrunner and is providing the liquidity facility. SMBC Nikko and Mizuho Securities acted as joint bookrunners and arrangers. The lead structuring agent on the bridge and warehouse was Deutsche Bank and Goldman Sachs was joint structuring agent. Phoenix American Financial Services (Ireland) is acting as managing agent. Wilmington Trust (USA) is the facility agent, security trustee, operating bank and trustee.

KPMG (Dublin, Tokyo) advised on ABS due diligence accounting and tax advice. Milbank (London, New York) advised on the structuring, ABS issuance and acted on behalf of the warehouse borrower. K&L Gates (Tokyo, Singapore) advised on the acquisition and novation process. Clifford Chance (London, New York) advised the lenders on the warehouse facility and acted as ABS counsel. Walkers (Dublin, Cayman) advised on the creation, management of the various SPCs and local counsel support. Nishimura & Asahi advised on Japan related legal structuring.

Multiple local counsels supported the novation and ABS transition including Hogan Lovells (Singapore, London), Stephenson Harwood (France, Malaysia), HFW (Belgium), Blakes (Canada), Tay and Partners (Malaysia), Sycip (Philippines), Dentons (Qatar), Arias (South America), Morris & James and DFPHJ (US). Wilmington Trust (London) was trustee for the debt warehouse.

MBA, Avitas and IBA provided valuations and Alton provided maintenance projections.

The Milbank team was composed by partners Drew Fine (Picture) and Nick Swinburne, alongside partners Brett Nadritch and Andrew Walker, special counsel Freyda Mechlowicz, associates Jon Cripps, Niels Jensen, Olivia Cornelius, Matt Slider, George Miller, Demi Hueth and Elizabeth McNichol, and trainee Ryan Cattle.

Involved fees earner: Ryan Cattle – Milbank; Olivia Cornelius – Milbank; Jon Cripps – Milbank; Drew Fine – Milbank; Demi Hueth – Milbank; Niels Jensen – Milbank; Elizabeth McNichol – Milbank; Freyda Mechlowicz – Milbank; George Miller – Milbank; Brett Nadritch – Milbank; Matt Slider – Milbank; Nick Swinburne – Milbank; Andrew Walker – Milbank;

Law Firms: Milbank;

Clients: JP Lease Products and Services; Stratos Aircraft Management;