aviation abs: dealing with uncertainty · 2020-06-12 · aviation abs: dealing with uncertainty...
TRANSCRIPT
Advisory ABSkpmg.ie/aviation
Dealing with uncertainty
The current environment challenges ABS investors, directors, and servicers. We can help you make the right decisions.
Credit Analysis Decision Support
Financial Modelling, Forecasting & Stress Testing
Liquidity Management Investor Returns & Cashflow Triggers
Distribution of Funds Review
20%
30%
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We have profiled recent ABS deals based on publicly available information to gauge how prepared companies are for unexpected shocks. Here is what you need to know:
Indenture DSCR breaches, triggering cash traps and cash sweeps, are significantly more likely to occur as net lease revenue collections decrease by 20%. Have you considered the impact of DSCR breaches and the possible remedies for such events?
• We provide full credit analysis services using qualitative and quantitative measures. We can act as an independent service provider or review your credit function as part of Internal Audit or Operational Function reviews.
• We can help you understand and quantify your short and long term lease restructuring options and implications.
• What are your options on security realisation, liquidity facility drawdown, maintenance deferrals, additional equity advances and asset sales?
• We can help with Investor communication plans backed by analysis.
• We can assist with capital expenditure reviews (storage costs, off-lease insurances, return-to-service costs, maintenance, etc.)
• Are you getting the correct management information and forecasting to support effective decision making?
• We provide stress testing analysis of business cases and scenario planning.
• Are you going to experience short-term liquidity issues?
• What are your options? • Could these trigger Indenture Events
of Default unless action is taken?
• What restructuring arrangements can you agree to, while safe-guarding investor returns?
• Could your decisions lead to Indenture DSCR breaches, cash traps and cash sweeps, or an Indenture Event of Default?
• Is now the right time to sell aircraft or consider refinancing options?
• Should equity holders provide “Equity Additional Advances”? Will this provide a better long term return?
• Are you confident that the distribution of funds is in line with the Indenture agreement?
• We have reviewed Indenture agreements and provided in-flight reviews for management and investors.
• We understand how unexpected events, shortfalls, aircraft returns and utilization decreases, cash traps and sweeps, all influence distribution criteria.
A 30% haircut to net lease revenue will see Senior Noteholder repayments come under pressure. Do you know your limits for the current year?
What revenue haircut can you support before experiencing an Indenture Event of Default? Have you considered the “Cure Options” possibly available to you to avert or reverse this default event?
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Aviation ABS: Dealing with uncertainty
Information you need to know
Kieran O’BrienPartner Head of Aviation Advisory
M: +353 87 744 2456E: [email protected]
Gillian KellyPartner Risk Consulting
M: +353 87 744 1120E: [email protected]
Declan Keane Partner Advisory
M: +353 87 744 1335E: [email protected]
Brendan CrowleyDirector Risk Consulting
M: +353 87 050 4338E: [email protected]
Sarah Moran Associate Director Risk Consulting
M: +353 87 050 4085E: [email protected]
Patrick Murphy Associate Director Management Consulting
M: +353 87 050 4176E: [email protected]
Gavin Sheehan Director Deal Advisory
M: +353 87 050 4489E: [email protected]
Ciara O CallaghanDirector Management Consulting
M: +353 87 050 4528E: [email protected]
Please don’t hesitate to contact us to discuss any of the points raised here
kpmg.ie/aviation
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Produced by: KPMG’s Creative Services. Publication Date: January 2020. (6144)