Private jet company VistaJet is attempting to raise $500 million in new money via a six year term loan B, according to an investor presentation, that allows for a $100 million distribution to equity holders. Pricing for the proposed term loan has not been set yet and investor commitments are due by March 27th. The deal was pitched to investors on a call Tuesday, March 18.
Sources say assuming a 1-1.5% OID, the cost to Vista (based on current price talk) would be ~8-8.5% on a floating basis. Also while the term loan B is NC1 and par thereafter, the investors’ return might be slightly higher if the loan is called early.
The term loan raise is on top of a $600 million convertible preferred equity (dividend rate accretion PIK-only) raise led by RRJ Capital which is expected to close March 28th, according to the company. The pref share raise has taken months to sell by Jefferies with a small concentration of investors and also includes Vista’s long time investor private equity fund Rhône Group. As of the end of 2024 Vista’s unaudited estimate of its total debt is $4.237 billion, according to the private presentation.
VistaJet says it will use the new money to repay some of its existing debt that includes paying off some of the $670 million of aircraft financing debt and repay its RCF/bank debt ($229mn). The $100 million cash out to equity investors is what is known as a dividend recapitalization. This is when the company uses new money from debt it raised and not actual profits from running the business to pay early investors in its private stock, which includes the VistaJet founder Thomas Flohr.
The offering will use eligible aircraft (jets worth around $700 million in collateral value according to VistaJet) for collateral with some carveouts. What’s notable is the fact that they are not using the raise to do typical EETC financing and have instead appear to be approaching a different kind of investor group. As of the end of 2024 Vista holds $900 million of EETC financing on its books.
Additionally, Vista listed the value of the planes at retail not mark to trade (wholesale) which a creditor would likely have to sell at wholesale prices if the loan wasn’t paid back and they had to take the collateral. Look at Vista’s Global 7500 tail number VH-VIL which is one of its newer planes (2.8 years old). It’s bluebook retail value is $66 million but its wholesale value is $58.57 million.
If Vista was doing a loan directly with a bank the standard would be the most conservative valuation. Retail assumes you sell when you want in a controlled fashion.
Valuing at retail is like saying we can sell all our bonds on the offer side during a liquidation without a problem. And if there was a liquidation and all the planes had to hit the market at once well then assuming basic supply and demand the value of the planes/collateral would drop (like a lot!).
Also, Vista’s fleet is typically older planes (avg 10 years of the collateral listed in the deal) and aerospace experts familiar with Vista’s fleet told this reporter they are known to be not always well maintained.
If Vista is selling into CLO funds who are typically very passive funds, without an experienced airline credit analyst, then they might not even pick up on the difference in valuation or be aware of how aggressively valued some experienced airline investors think Vista’s jets are. That said, if the term loan prices in the 8% range (there is a ton of HY money in the U.S. to put to work right now) investors could find that enough of an attractive rate and at least one sophisticated credit investor I spoke with thought the collateral was good enough.
S&P issued a new rating yesterday for the term loan B at BB-. The rater warned it would lower its rating if Vista Global is unable to achieve a weighted average FundsFromOpeations-to-debt ratio higher than 12% in 2025 and 2026, or if its free operating cash flow (FOCF) after lease payments remains negative or liquidity weakens. VistaJet’s bonds traded up on the news of the new capital raise and the issuer rating held at B+.
VistaJet’s parent Vista Global is a privately held company led by Swiss-born billionaire Thomas Flohr.
This story has been update with Bluebook airplane values and S&P’s rating
Update 4.1.25: Vista was telling the street last week it had oversubcribed on commitments in the new secured term loan to the tune of $700 million. Today the company announced the term loan B closed.
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