Willis Lease Finance Corporation (NASDAQ:WLFC) Files An 8-K Entry into a Material Definitive Agreement

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Willis Lease Finance Corporation (NASDAQ:WLFC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

On August4, 2017, Willis Engine Structured Trust III (“WEST III”), a direct, wholly-owned subsidiary of Willis Lease Finance Corporation (“Willis”), closed its offering of $335.7 million in aggregate principal amount of fixed rate notes (the “Notes”). The Notes were issued in two series, with the SeriesA Notes issued in an aggregate principal amount of $293.7 million and the SeriesB Notes in an aggregate principal amount of $42 million. The Notes are secured by, among other things, WEST III’s direct and indirect interests in a portfolio of 56 engines.

The SeriesA Notes have a fixed coupon of 4.69%, an expected maturity of approximately 10 years and a final maturity date of August15, 2042 and SeriesB Notes will have a fixed coupon of 6.36%, an expected maturity of approximately 10 years and a final maturity date of August15, 2042. The SeriesA Notes were issued at a price of 99.91487% of par and the SeriesB Notes were issued at a price of 98.29606% of par. Principal on the Notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the Indenture (as defined below). Proceeds from engine sales by WEST II will be used, at WEST III’s election subject to certain conditions, to reduce WEST III’s debt or to acquire other engines or aircraft.

In connection with this transaction, Willis and WEST III entered into a number of agreements, in addition to the Note Purchase Agreement previously reported on the Willis’ current report on Form8-K filed on July28, 2017, listed below:

1. Asset Purchase Agreement dated as of August4, 2017 by and between Willis, as seller, and WEST III, as purchaser, providing for, among other things, the sale by Willis to WEST III of the portfolio of 56 engines during a specified delivery period, by way of the sale of the beneficial ownership interests in trusts that each own one of the engines.

2. Trust Indenture dated as of August4, 2017 among WEST III, Deutsche Bank Trust Company Americas (“DBTCA”), as trustee and security trustee, Willis, as administrative agent, and BNP Paribas, as initial liquidity facility provider, providing for the issuance by WEST III of the Notes (the Indenture”). The Indenture contains customary covenants for offerings of this type that apply to WEST III and its subsidiaries (but not Willis and its subsidiaries other than WEST III)., including among others, limitations on incurrence of additional debt, limitations on distributions and dividends, limitations on asset dispositions, and a requirement to comply with certain concentration lease limits included in the Indenture. The Indenture also contains customary events of default.

to the Indenture, cash earned by WEST III will be collected in a pledged account, which will be used to service the Notes and any remaining amounts, after debt service and defined expenses, will be distributed to Willis. Additionally, amounts equal to a portion of WEST III’s maintenance costs (including maintenance reserve reimbursement obligations) and lease security deposit reimbursement obligations will be accumulated in pledged accounts and will be available to fund future maintenance events and to apply as security deposit amounts are permitted or required to be applied under the applicable lease, respectively.

3. Security Trust Agreement dated as of August4, 2017 among WEST III and DBTCA as security trustee (the “Security Trustee”) and operating bank (the “Security Trust Agreement”). to the Security Trust Agreement, WEST III grants, and each of WEST III’s future subsidiaries will grant, a security interest in substantially all of its assets to the Security Trustee for the benefit of the secured parties in the transaction. The assets of WEST III are not available to satisfy Willis’ obligations or those of any of our affiliates other than the obligations specific to WEST III.

4. Servicing Agreement dated as of August4, 2017 among WEST III and Willis, as servicer and administrative agent, providing for the appointment of Willis as the servicer of the assets of WEST III and its subsidiaries. WEST III will pay Willis monthly fees equal to 11.5% as servicer and 2.0% as administrative agent of the aggregate net rents actually received by WEST III on its engines. WEST III will also pay Willis a fee of 3.0% of the net proceeds from the sale of any engines.

5. Administrative Agency Agreement dated as of August4, 2017 among WEST III, Willis, as administrative agent and DBTCA, as trustee, providing for the appointment of Willis as the administrative agent of WEST and its subsidiaries.

6. Revolving Credit Agreement dated as of August4, 2017 among WEST III, Willis, as administrative agent and BNP Paribas, as initial liquidity facility provider, providing for a revolving loan available to be applied to certain of WEST III’s obligations.

Each of these agreements contains customary representations, warranties, covenants and events of default for a transaction of this type.

Item 2.03 Creation of a Direct Financial Obligation.

The information contained under Item 1.01 above is incorporated by reference into this Item 2.03.


About Willis Lease Finance Corporation (NASDAQ:WLFC)

Willis Lease Finance Corporation along with its subsidiaries is a lessor of commercial aircraft engines. The Company operates through two business segments, such as Leasing and Related Operations, and Spare Parts Sales. The Leasing and Related Operations segment involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment, and the selective purchase and resale of commercial aircraft engines and other aircraft equipment. The Spare Parts Sales segment involves the purchase and resale of after-market engine and airframe parts, whole engines, engine modules and portable aircraft components, and leasing of engines destined for disassembly and sale of parts. Its lease portfolio consists of approximately 200 engines and related equipment, 10 aircrafts and five spare engine parts packages. The Company’s business activities also include equipment leasing and spare parts sales.

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