A copy of this document, which comprises a prospectus by Doric Nimrod Air One Limited (the "Company") for the issue of Shares in the Company, prepared in accordance with the Prospectus Rules of the UK Listing Authority made pursuant to section 73A of the Financial Services and Markets Act 2000, has been filed with the Financial Services Authority in accordance with Rule 3.2 of the Prospectus Rules. This document forms the Listing Document for the purposes of the CISX listing application. The Shares are only suitable for investors (i) who understand the potential risk of capital loss and that there may be limited liquidity in the underlying investments of the Company, (ii) for whom an investment in the Shares is part of a diversified investment programme and (iii) who fully understand and are willing to assume the risks involved in such an investment programme. Application has been made to the London Stock Exchange for the Shares of the Company, issued and to be issued in connection with the Placing, to be admitted to the Specialist Fund Market of the London Stock Exchange plc and application has been made to the CISX for the Shares to be admitted to listing on the Official List of the CISX. The Company and the Directors, whose names appear on page 22 of this prospectus, accept responsibility for the information contained in this prospectus. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The Company is not authorised or regulated by the Financial Services Authority, the Guernsey Financial Services Commission or any other regulatory authority. The attention of potential investors is drawn to the Risk Factors set out on pages 8 to 17 of this prospectus. The latest time and date for applications under the Placing is 12.00noon on 10 December 2010. Further details of the Placing are set out in Part III of this prospectus. Capitalised terms contained in this prospectus shall have the meanings set out in Part X of this prospectus. Doric Nimrod Air One Limited (a company incorporated with limited liability under the laws of Guernsey with registered number 52484) Placing of 39,625,000 Shares at an Issue Price of 100 pence per Share Placing Agent Nimrod Capital LLP This document does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Shares in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company or Nimrod Capital LLP. The offer and sale of Shares have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan. Subject to certain exemptions, the Shares may not be offered to or sold within Australia, Canada or Japan or to any national, resident or citizen of Australia, Canada or Japan. The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") and, as such, investors will not be entitled to the benefits of the US Investment Company Act. No purchase, sale or transfer of the Shares may be made except in circumstances in which such purchase, sale or transfer will not result in the Company being required to register as an investment company under the US Investment Company Act. The Shares have not bee4n and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. The Shares may not be offered, sold, pledged, or otherwise transferred or delivered within the United States or to, or for the account or benefit of, any US person (as defined in Regulation S under the US Securities Act, "US Person"). In connection with the Placing, the Shares are being offered and sold only outside the United States to, or for the account or benefit of, investors that are not US Persons in "offshore transactions" within the meaning of, and in reliance upon, the exemption from registration provided by Regulation S under the US Securities Act. Investors may be required to bear the financial risks of this investment in the Shares for an indefinite period of time. For a description of restrictions on offers, sales and transfers of Shares, see "Purchase and Transfer Restrictions" beginning on page 19 of this document. Nimrod Capital LLP (which is authorised and regulated by the Financial Services Authority) is acting for the Company in connection with the Placing and will not regard any other person (whether or not a recipient of this document or other information) as its customer in relation thereto. Any prospective purchaser of Shares is recommended to seek its own professional advice. Neither the admission of the Shares to the Official List of the CISX nor the approval of this prospectus pursuant to the listing requirements of the CISX shall constitute a warranty or representation by the CISX as to the competence of the service providers to or any other party connected with the Company, the adequacy and accuracy of the information contained in the prospectus or the suitability of the issuer for investment or for any other purpose. The CISX has been recognised by the HMRC under Section 841 of the Income and Corporation Tax Act 1988 and the UK Financial Services Authority has approved the CISX as a Designated Investment Exchange within the meaning of the Financial Services and Markets Act 2000. 8 December 2010
Doric Nimrod Air One Limited
Mar 30, 2023
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Microsoft Word - Project Fly - Prospectus _Print Proof_.docA copy of this document, which comprises a prospectus by Doric Nimrod Air One Limited (the "Company") for the issue of Shares in the Company, prepared in accordance with the Prospectus Rules of the UK Listing Authority made pursuant to section 73A of the Financial Services and Markets Act 2000, has been filed with the Financial Services Authority in accordance with Rule 3.2 of the Prospectus Rules. This document forms the Listing Document for the purposes of the CISX listing application.
The Shares are only suitable for investors (i) who understand the potential risk of capital loss and that there may be limited liquidity in the underlying investments of the Company, (ii) for whom an investment in the Shares is part of a diversified investment programme and (iii) who fully understand and are willing to assume the risks involved in such an investment programme.
Application has been made to the London Stock Exchange for the Shares of the Company, issued and to be issued in connection with the Placing, to be admitted to the Specialist Fund Market of the London Stock Exchange plc and application has been made to the CISX for the Shares to be admitted to listing on the Official List of the CISX. The Company and the Directors, whose names appear on page 22 of this prospectus, accept responsibility for the information contained in this prospectus. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Company is not authorised or regulated by the Financial Services Authority, the Guernsey Financial Services Commission or any other regulatory authority.
The attention of potential investors is drawn to the Risk Factors set out on pages 8 to 17 of this prospectus. The latest time and date for applications under the Placing is 12.00noon on 10 December 2010. Further details of the Placing are set out in Part III of this prospectus. Capitalised terms contained in this prospectus shall have the meanings set out in Part X of this prospectus.
Doric Nimrod Air One Limited (a company incorporated with limited liability
under the laws of Guernsey with registered number 52484)
Placing of 39,625,000 Shares at an Issue Price of 100 pence per Share Placing Agent
Nimrod Capital LLP
This document does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Shares in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company or Nimrod Capital LLP. The offer and sale of Shares have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan. Subject to certain exemptions, the Shares may not be offered to or sold within Australia, Canada or Japan or to any national, resident or citizen of Australia, Canada or Japan.
The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") and, as such, investors will not be entitled to the benefits of the US Investment Company Act. No purchase, sale or transfer of the Shares may be made except in circumstances in which such purchase, sale or transfer will not result in the Company being required to register as an investment company under the US Investment Company Act. The Shares have not bee4n and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. The Shares may not be offered, sold, pledged, or otherwise transferred or delivered within the United States or to, or for the account or benefit of, any US person (as defined in Regulation S under the US Securities Act, "US Person"). In connection with the Placing, the Shares are being offered and sold only outside the United States to, or for the account or benefit of, investors that are not US Persons in "offshore transactions" within the meaning of, and in reliance upon, the exemption from registration provided by Regulation S under the US Securities Act.
Investors may be required to bear the financial risks of this investment in the Shares for an indefinite period of time. For a description of restrictions on offers, sales and transfers of Shares, see "Purchase and Transfer Restrictions" beginning on page 19 of this document.
Nimrod Capital LLP (which is authorised and regulated by the Financial Services Authority) is acting for the Company in connection with the Placing and will not regard any other person (whether or not a recipient of this document or other information) as its customer in relation thereto. Any prospective purchaser of Shares is recommended to seek its own professional advice.
Neither the admission of the Shares to the Official List of the CISX nor the approval of this prospectus pursuant to the listing requirements of the CISX shall constitute a warranty or representation by the CISX as to the competence of the service providers to or any other party connected with the Company, the adequacy and accuracy of the information contained in the prospectus or the suitability of the issuer for investment or for any other purpose.
The CISX has been recognised by the HMRC under Section 841 of the Income and Corporation Tax Act 1988 and the UK Financial Services Authority has approved the CISX as a Designated Investment Exchange within the meaning of the Financial Services and Markets Act 2000.
8 December 2010
Introduction ...............................................................................................................................23 Investment objective ..................................................................................................................23 Investment policy.......................................................................................................................23 Initial investment process ..........................................................................................................23 Market opportunity ....................................................................................................................23 Distribution policy.....................................................................................................................24 Borrowing powers .....................................................................................................................25 Currency risk management ........................................................................................................25 Further issues of shares..............................................................................................................26 Liquidation resolution................................................................................................................26 Reports and accounts ................................................................................................................. 26 Net Asset Value .........................................................................................................................27
Directors ....................................................................................................................................28 Administrator .............................................................................................................................30 Corporate and Shareholder Adviser ...........................................................................................30 Fees and expenses ......................................................................................................................30 Pre-Admission Company Capitalisation....................................................................................32 Taxation ..................................................................................................................................... 32 Meetings and reports to Shareholders........................................................................................32 Conflicts of interest....................................................................................................................32 Corporate governance ................................................................................................................33 Audit committee ........................................................................................................................33
PART VIII PRO FORMA FINANCIAL INFORMATION..................................................................... 67
PART X DEFINITIONS .......................................................................................................................101
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SUMMARY
This summary should be read as an introduction to this Prospectus and any decision to invest in the Shares should be based on consideration of this Prospectus as a whole. Where a claim relating to the information contained in this Prospectus is brought before a court, a claimant investor may, under the national legislation of an EEA state, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches to the Company and its Directors, who are responsible for this summary, including any translation of this summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus.
The Company
The Company is a newly incorporated Guernsey domiciled limited liability company, incorporated on 8 October 2010 with registered number 52484. Its share capital is denominated in Sterling and consists of one class of Shares and one class of Subordinated Administrative Shares. Application has been made to the London Stock Exchange and to the CISX for all the Shares issued, and to be issued pursuant to the Placing, to be admitted to trading on the SFM and to listing on the Official List of the CISX.
Investment objective
The Company’s investment objective is to obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling a single aircraft.
Investment policy
The Company will initially purchase one Airbus A380-861 aircraft, manufacturer’s serial number 016 which it will initially lease to Emirates Airlines, the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates.
The Company will seek to provide investors with income and capital returns through investment in the Asset.
Any material change to the investment policy of the Company will be made only with the approval of Shareholders.
Initial investment process
As at Admission, the Company will use the proceeds of the Placing to part-fund the purchase of the Asset. A senior secured financing facility, provided by Westpac, in the amount of US$122 million will provide the remaining monies as needed for the acquisition of the Asset. Upon purchase of the Asset, the Company will enter into a Lease with Emirates for an initial term of 12 years, with fixed lease rentals for the duration. The debt portion of the funding will fully amortise over the 12 year term of the Lease, leaving the aircraft unencumbered at the conclusion of the Lease.
The Company intends to enter into the Sale and Purchase Agreement, the Loan Agreement and the Lease as at the date of Admission. Admission is conditional on the execution of the Sale and Purchase Agreement, the Loan Agreement and the Lease by all the relevant parties.
Market opportunity
If the Placing Amount is raised and Admission is effected, the Company will be able to acquire the Asset and lease such Asset to an airline carrier on what the Company considers, as advised by Doric, to be attractive terms.
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The Asset
The Asset is an Airbus A380-861 aircraft to be purchased by the Company pursuant to the Sale and Purchase Agreement. As at the date of this Prospectus the Asset is 24 months old and it is currently owned by Emirates.
The Lease
A lease has been executed pursuant to which the Company will lease the Asset to Emirates. The Lease rentals consists of Sterling lease rental payments and US$ lease rental payments. The US$ lease rental payments match the anticipated principal and interest payments under the Loan (described below). The Lease contains various provisions, including provisions as to insurance of the Asset and maintenance.
Emirates
Emirates will be the initial lessee of the Asset pursuant to the terms of the Lease. Emirates is the official airline of the Emirate of Dubai.
The Loan
The investment in the aircraft will be part-funded by the proceeds of the Placing and part- funded through the Loan, provided by Westpac, in the amount of US$122 million. Pursuant to the Loan Agreement, a security package in favour of Westpac, including a mortgage over the Asset, will be in place.
Distribution policy
The Company aims to provide Shareholders with an attractive total return comprising income, from distributions through the period of the Company's ownership of the Asset, and capital, upon the sale of the Asset.
In the event that the Company is wound-up pursuant to a Shareholder resolution, Shareholders may also receive a capital return reflecting any profit on the sale of the Asset.
Income distributions
The Company will receive income from the Lease Rental made pursuant to the Lease. The Directors intend to target a gross distribution to Shareholders of 2.25 pence per Share per quarter (after costs and payment of any fees) subject to compliance with applicable laws and regulations. There can be no guarantee that dividends will be paid to Shareholders and, if dividends are paid, as to the timing and amount of any such dividend.
Return of capital
If and when the Company is wound-up (pursuant to a Shareholder resolution, including the Liquidation Resolution) the Company intends to return to Shareholders the net capital proceeds upon the eventual sale of the Asset subject to compliance with the Companies Laws (including any applicable requirements of the solvency test contained therein).
Borrowing powers
In addition to the Loan, the Company may, from time to time use borrowings. To this end the Company may arrange an overdraft facility for efficient cash management. The Articles restrict borrowing other than the Loan to an amount not exceeding 15 per cent. of the NAV of the Company at the time of drawdown. Borrowing facilities will only be drawn down with the approval of Directors on a case by case basis. Directors may also drawdown on the
4
overdraft facility for extraordinary expenses determined by them, on the advice of Doric, to be necessary to safeguard the overall investment objective.
Liquidation Resolution
Although the Company does not have a fixed life, the articles of incorporation require that the Directors convene a general meeting of the Company six months before the end of the term of the Lease where an ordinary resolution will be proposed that the Company proceed to an orderly wind-up at the end of the term of the Lease (the "Liquidation Resolution") and the Directors will consider (and if necessary, propose to Shareholders) alternatives for the future of the Company, including re-leasing the Asset, or selling the Asset and reinvesting the capital received from the sale of the Asset in another aircraft.
Directors
The Directors are responsible for managing the business affairs of the Company in accordance with the Articles of Incorporation and have overall responsibility for the Company's activities.
Each of the Directors is a non-executive director and is independent of the Asset Manager and the Placing Agent, Nimrod Capital LLP.
The Directors of the Company are Charles Edmund Wilkinson (Chairman), Norbert Bannon and Geoffrey Alan Hall.
No Investment Manager
The Company will not have an investment or portfolio manager. The Directors will have responsibility for compliance with the Investment Policy.
Asset Manager
Doric Asset Finance Limited has been appointed by the Company to provide asset management services to the Company. Pursuant to the Asset Management Agreement, Doric will: (i) monitor Emirates’ and any subsequent lessee’s performance of its financial obligations under the Lease and any subsequent lease respectively (which shall include the obligations relating to the maintenance of insurance cover); (ii) provide the Company with information regarding alternatives with respect to the Asset; (iii) carry out mid-lease inspections of the Asset; (iv) provide the Company with asset monitoring reports describing the state and any material changes to the state of the Asset; and (v) liaise, as and when necessary, with the Lenders on all matters relating to the Loan and the Loan Agreement.
Doric is regulated by the Financial Services Authority and is a member of ISTAT, the International Society of Transport Aircraft Trading.
The Doric Group is a leading provider of products and services for investors in the fields of aviation, shipping, renewable energy and real estate. The Doric Group has an international presence, with offices in Germany, the United States and the United Kingdom, and a multinational team which offers access to extensive relationship networks and expert asset knowledge.
The Doric team has a long track record of offering investment opportunities with positive long- term performance.
The Placing
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39,625,000 Shares of no par value are being marketed and are available under the Placing. The maximum number of Shares available under the Placing should not be taken as an indication of the number of Shares finally to be issued.
Application has been made to the London Stock Exchange for all the Shares to be issued pursuant to the Placing to be admitted to the SFM. Application has also been made to the CISX for all the Shares to be issued under the Placing to be admitted to listing on the Official List of the CISX. It is expected that Admission will become effective and that dealings will commence on 13 December 2010.
Shares will be issued under the Placing at a price of 100 pence per Share.
The Placing is not being underwritten.
The Company, Doric and Nimrod have entered into the Placing Agreement whereby Nimrod (which is authorised and regulated by the Financial Services Authority) has agreed, as Placing Agent for the Company, to use its reasonable endeavours to procure subscribers for Shares under the Placing at the Issue Price.
The Placing will not proceed if the Placing Proceeds are less than £39,625,000. If the Placing does not proceed, subscription monies received will be returned without interest at the risk of the applicant.
Applications under the Placing must be for a minimum subscription amount of £ 10,000.
Risk Factors
The Company is a recently established asset holding company and has no operating history. Accordingly, there are no historical financial statements or other meaningful operating or financial data with which to evaluate the Company and its performance.
The success of the Company will depend on Doric's ability to advise on, and manage the investment in the Asset in accordance with the Company's investment objective and policy.
Investment in aircraft and aircraft leases are only suitable for sophisticated investors who fully understand and are willing to assume the risks involved in such investments.
The target return figure is a target only and is based on financial projections which are themselves based on assumptions regarding market conditions and economic environment. There is no guarantee that the target return of the Company can be achieved at the level set out in this Prospectus or that its Net Asset Value will not decrease.
Doric currently manages other investment vehicles that have similar investment objectives and policies to the Company and may manage other similar investment vehicles in future. In certain circumstances, this may give rise to potential conflicts of interests.
Under the provisions of the Loan agreement the Company must comply with loan covenants and undertakings. A failure to comply with such covenants or undertakings may result in Westpac recalling the Loan. In such circumstances, the Company may be required to sell the Asset to repay the outstanding Loan. If the Asset is sold, the Shareholders will only receive the proceeds left after deducting for Loan Repayments. There may be no proceeds left after such deduction or the
6
remaining proceeds may be substantially lower than their initial investment in the Company.
The sale of the Asset may be effected in a currency other than Sterling (including US$) and therefore any capital distribution of the proceeds of sale may be subject to currency movements.
Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to meet its investment objectives.
The ability of the Company to achieve its investment objectives is significantly dependent upon the expertise of certain key personnel at Doric.
The Company's Net Asset Value, which is based on market quotations and/or third party pricing information, may not properly reflect the actual realisable value of the Asset at any particular point in time.
The Airbus 380-800 is a newly developed generation of aircraft. There is at present not sufficient experience and data to give a complete assessment of the long-term use and operation of the aircraft. There is a risk that the newly developed materials may be found to be less efficient or durable than expected, thereby leading to higher maintenance and repair costs.
The Asset will be insured by Emirates pursuant to the Lease. However, inflation, changes in ordinances, environmental considerations and other factors may make the insurance proceeds insufficient to repair or replace the Asset if it is damaged or destroyed.
A failure by Emirates to comply with its payment obligations under the Lease may lead to a reduction in distributions paid on the Shares and/or in the value of the Shares and have an adverse effect on the Company.
The Company's investment in the Asset is designed to be long-term. The Asset cannot be easily sold or transferred given the nature of the Asset and the absence of a liquid market in aircraft. The market price and value of the Asset may fluctuate due to a…
The Shares are only suitable for investors (i) who understand the potential risk of capital loss and that there may be limited liquidity in the underlying investments of the Company, (ii) for whom an investment in the Shares is part of a diversified investment programme and (iii) who fully understand and are willing to assume the risks involved in such an investment programme.
Application has been made to the London Stock Exchange for the Shares of the Company, issued and to be issued in connection with the Placing, to be admitted to the Specialist Fund Market of the London Stock Exchange plc and application has been made to the CISX for the Shares to be admitted to listing on the Official List of the CISX. The Company and the Directors, whose names appear on page 22 of this prospectus, accept responsibility for the information contained in this prospectus. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Company is not authorised or regulated by the Financial Services Authority, the Guernsey Financial Services Commission or any other regulatory authority.
The attention of potential investors is drawn to the Risk Factors set out on pages 8 to 17 of this prospectus. The latest time and date for applications under the Placing is 12.00noon on 10 December 2010. Further details of the Placing are set out in Part III of this prospectus. Capitalised terms contained in this prospectus shall have the meanings set out in Part X of this prospectus.
Doric Nimrod Air One Limited (a company incorporated with limited liability
under the laws of Guernsey with registered number 52484)
Placing of 39,625,000 Shares at an Issue Price of 100 pence per Share Placing Agent
Nimrod Capital LLP
This document does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Shares in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company or Nimrod Capital LLP. The offer and sale of Shares have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan. Subject to certain exemptions, the Shares may not be offered to or sold within Australia, Canada or Japan or to any national, resident or citizen of Australia, Canada or Japan.
The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") and, as such, investors will not be entitled to the benefits of the US Investment Company Act. No purchase, sale or transfer of the Shares may be made except in circumstances in which such purchase, sale or transfer will not result in the Company being required to register as an investment company under the US Investment Company Act. The Shares have not bee4n and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. The Shares may not be offered, sold, pledged, or otherwise transferred or delivered within the United States or to, or for the account or benefit of, any US person (as defined in Regulation S under the US Securities Act, "US Person"). In connection with the Placing, the Shares are being offered and sold only outside the United States to, or for the account or benefit of, investors that are not US Persons in "offshore transactions" within the meaning of, and in reliance upon, the exemption from registration provided by Regulation S under the US Securities Act.
Investors may be required to bear the financial risks of this investment in the Shares for an indefinite period of time. For a description of restrictions on offers, sales and transfers of Shares, see "Purchase and Transfer Restrictions" beginning on page 19 of this document.
Nimrod Capital LLP (which is authorised and regulated by the Financial Services Authority) is acting for the Company in connection with the Placing and will not regard any other person (whether or not a recipient of this document or other information) as its customer in relation thereto. Any prospective purchaser of Shares is recommended to seek its own professional advice.
Neither the admission of the Shares to the Official List of the CISX nor the approval of this prospectus pursuant to the listing requirements of the CISX shall constitute a warranty or representation by the CISX as to the competence of the service providers to or any other party connected with the Company, the adequacy and accuracy of the information contained in the prospectus or the suitability of the issuer for investment or for any other purpose.
The CISX has been recognised by the HMRC under Section 841 of the Income and Corporation Tax Act 1988 and the UK Financial Services Authority has approved the CISX as a Designated Investment Exchange within the meaning of the Financial Services and Markets Act 2000.
8 December 2010
Introduction ...............................................................................................................................23 Investment objective ..................................................................................................................23 Investment policy.......................................................................................................................23 Initial investment process ..........................................................................................................23 Market opportunity ....................................................................................................................23 Distribution policy.....................................................................................................................24 Borrowing powers .....................................................................................................................25 Currency risk management ........................................................................................................25 Further issues of shares..............................................................................................................26 Liquidation resolution................................................................................................................26 Reports and accounts ................................................................................................................. 26 Net Asset Value .........................................................................................................................27
Directors ....................................................................................................................................28 Administrator .............................................................................................................................30 Corporate and Shareholder Adviser ...........................................................................................30 Fees and expenses ......................................................................................................................30 Pre-Admission Company Capitalisation....................................................................................32 Taxation ..................................................................................................................................... 32 Meetings and reports to Shareholders........................................................................................32 Conflicts of interest....................................................................................................................32 Corporate governance ................................................................................................................33 Audit committee ........................................................................................................................33
PART VIII PRO FORMA FINANCIAL INFORMATION..................................................................... 67
PART X DEFINITIONS .......................................................................................................................101
2
SUMMARY
This summary should be read as an introduction to this Prospectus and any decision to invest in the Shares should be based on consideration of this Prospectus as a whole. Where a claim relating to the information contained in this Prospectus is brought before a court, a claimant investor may, under the national legislation of an EEA state, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches to the Company and its Directors, who are responsible for this summary, including any translation of this summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus.
The Company
The Company is a newly incorporated Guernsey domiciled limited liability company, incorporated on 8 October 2010 with registered number 52484. Its share capital is denominated in Sterling and consists of one class of Shares and one class of Subordinated Administrative Shares. Application has been made to the London Stock Exchange and to the CISX for all the Shares issued, and to be issued pursuant to the Placing, to be admitted to trading on the SFM and to listing on the Official List of the CISX.
Investment objective
The Company’s investment objective is to obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling a single aircraft.
Investment policy
The Company will initially purchase one Airbus A380-861 aircraft, manufacturer’s serial number 016 which it will initially lease to Emirates Airlines, the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates.
The Company will seek to provide investors with income and capital returns through investment in the Asset.
Any material change to the investment policy of the Company will be made only with the approval of Shareholders.
Initial investment process
As at Admission, the Company will use the proceeds of the Placing to part-fund the purchase of the Asset. A senior secured financing facility, provided by Westpac, in the amount of US$122 million will provide the remaining monies as needed for the acquisition of the Asset. Upon purchase of the Asset, the Company will enter into a Lease with Emirates for an initial term of 12 years, with fixed lease rentals for the duration. The debt portion of the funding will fully amortise over the 12 year term of the Lease, leaving the aircraft unencumbered at the conclusion of the Lease.
The Company intends to enter into the Sale and Purchase Agreement, the Loan Agreement and the Lease as at the date of Admission. Admission is conditional on the execution of the Sale and Purchase Agreement, the Loan Agreement and the Lease by all the relevant parties.
Market opportunity
If the Placing Amount is raised and Admission is effected, the Company will be able to acquire the Asset and lease such Asset to an airline carrier on what the Company considers, as advised by Doric, to be attractive terms.
3
The Asset
The Asset is an Airbus A380-861 aircraft to be purchased by the Company pursuant to the Sale and Purchase Agreement. As at the date of this Prospectus the Asset is 24 months old and it is currently owned by Emirates.
The Lease
A lease has been executed pursuant to which the Company will lease the Asset to Emirates. The Lease rentals consists of Sterling lease rental payments and US$ lease rental payments. The US$ lease rental payments match the anticipated principal and interest payments under the Loan (described below). The Lease contains various provisions, including provisions as to insurance of the Asset and maintenance.
Emirates
Emirates will be the initial lessee of the Asset pursuant to the terms of the Lease. Emirates is the official airline of the Emirate of Dubai.
The Loan
The investment in the aircraft will be part-funded by the proceeds of the Placing and part- funded through the Loan, provided by Westpac, in the amount of US$122 million. Pursuant to the Loan Agreement, a security package in favour of Westpac, including a mortgage over the Asset, will be in place.
Distribution policy
The Company aims to provide Shareholders with an attractive total return comprising income, from distributions through the period of the Company's ownership of the Asset, and capital, upon the sale of the Asset.
In the event that the Company is wound-up pursuant to a Shareholder resolution, Shareholders may also receive a capital return reflecting any profit on the sale of the Asset.
Income distributions
The Company will receive income from the Lease Rental made pursuant to the Lease. The Directors intend to target a gross distribution to Shareholders of 2.25 pence per Share per quarter (after costs and payment of any fees) subject to compliance with applicable laws and regulations. There can be no guarantee that dividends will be paid to Shareholders and, if dividends are paid, as to the timing and amount of any such dividend.
Return of capital
If and when the Company is wound-up (pursuant to a Shareholder resolution, including the Liquidation Resolution) the Company intends to return to Shareholders the net capital proceeds upon the eventual sale of the Asset subject to compliance with the Companies Laws (including any applicable requirements of the solvency test contained therein).
Borrowing powers
In addition to the Loan, the Company may, from time to time use borrowings. To this end the Company may arrange an overdraft facility for efficient cash management. The Articles restrict borrowing other than the Loan to an amount not exceeding 15 per cent. of the NAV of the Company at the time of drawdown. Borrowing facilities will only be drawn down with the approval of Directors on a case by case basis. Directors may also drawdown on the
4
overdraft facility for extraordinary expenses determined by them, on the advice of Doric, to be necessary to safeguard the overall investment objective.
Liquidation Resolution
Although the Company does not have a fixed life, the articles of incorporation require that the Directors convene a general meeting of the Company six months before the end of the term of the Lease where an ordinary resolution will be proposed that the Company proceed to an orderly wind-up at the end of the term of the Lease (the "Liquidation Resolution") and the Directors will consider (and if necessary, propose to Shareholders) alternatives for the future of the Company, including re-leasing the Asset, or selling the Asset and reinvesting the capital received from the sale of the Asset in another aircraft.
Directors
The Directors are responsible for managing the business affairs of the Company in accordance with the Articles of Incorporation and have overall responsibility for the Company's activities.
Each of the Directors is a non-executive director and is independent of the Asset Manager and the Placing Agent, Nimrod Capital LLP.
The Directors of the Company are Charles Edmund Wilkinson (Chairman), Norbert Bannon and Geoffrey Alan Hall.
No Investment Manager
The Company will not have an investment or portfolio manager. The Directors will have responsibility for compliance with the Investment Policy.
Asset Manager
Doric Asset Finance Limited has been appointed by the Company to provide asset management services to the Company. Pursuant to the Asset Management Agreement, Doric will: (i) monitor Emirates’ and any subsequent lessee’s performance of its financial obligations under the Lease and any subsequent lease respectively (which shall include the obligations relating to the maintenance of insurance cover); (ii) provide the Company with information regarding alternatives with respect to the Asset; (iii) carry out mid-lease inspections of the Asset; (iv) provide the Company with asset monitoring reports describing the state and any material changes to the state of the Asset; and (v) liaise, as and when necessary, with the Lenders on all matters relating to the Loan and the Loan Agreement.
Doric is regulated by the Financial Services Authority and is a member of ISTAT, the International Society of Transport Aircraft Trading.
The Doric Group is a leading provider of products and services for investors in the fields of aviation, shipping, renewable energy and real estate. The Doric Group has an international presence, with offices in Germany, the United States and the United Kingdom, and a multinational team which offers access to extensive relationship networks and expert asset knowledge.
The Doric team has a long track record of offering investment opportunities with positive long- term performance.
The Placing
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39,625,000 Shares of no par value are being marketed and are available under the Placing. The maximum number of Shares available under the Placing should not be taken as an indication of the number of Shares finally to be issued.
Application has been made to the London Stock Exchange for all the Shares to be issued pursuant to the Placing to be admitted to the SFM. Application has also been made to the CISX for all the Shares to be issued under the Placing to be admitted to listing on the Official List of the CISX. It is expected that Admission will become effective and that dealings will commence on 13 December 2010.
Shares will be issued under the Placing at a price of 100 pence per Share.
The Placing is not being underwritten.
The Company, Doric and Nimrod have entered into the Placing Agreement whereby Nimrod (which is authorised and regulated by the Financial Services Authority) has agreed, as Placing Agent for the Company, to use its reasonable endeavours to procure subscribers for Shares under the Placing at the Issue Price.
The Placing will not proceed if the Placing Proceeds are less than £39,625,000. If the Placing does not proceed, subscription monies received will be returned without interest at the risk of the applicant.
Applications under the Placing must be for a minimum subscription amount of £ 10,000.
Risk Factors
The Company is a recently established asset holding company and has no operating history. Accordingly, there are no historical financial statements or other meaningful operating or financial data with which to evaluate the Company and its performance.
The success of the Company will depend on Doric's ability to advise on, and manage the investment in the Asset in accordance with the Company's investment objective and policy.
Investment in aircraft and aircraft leases are only suitable for sophisticated investors who fully understand and are willing to assume the risks involved in such investments.
The target return figure is a target only and is based on financial projections which are themselves based on assumptions regarding market conditions and economic environment. There is no guarantee that the target return of the Company can be achieved at the level set out in this Prospectus or that its Net Asset Value will not decrease.
Doric currently manages other investment vehicles that have similar investment objectives and policies to the Company and may manage other similar investment vehicles in future. In certain circumstances, this may give rise to potential conflicts of interests.
Under the provisions of the Loan agreement the Company must comply with loan covenants and undertakings. A failure to comply with such covenants or undertakings may result in Westpac recalling the Loan. In such circumstances, the Company may be required to sell the Asset to repay the outstanding Loan. If the Asset is sold, the Shareholders will only receive the proceeds left after deducting for Loan Repayments. There may be no proceeds left after such deduction or the
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remaining proceeds may be substantially lower than their initial investment in the Company.
The sale of the Asset may be effected in a currency other than Sterling (including US$) and therefore any capital distribution of the proceeds of sale may be subject to currency movements.
Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to meet its investment objectives.
The ability of the Company to achieve its investment objectives is significantly dependent upon the expertise of certain key personnel at Doric.
The Company's Net Asset Value, which is based on market quotations and/or third party pricing information, may not properly reflect the actual realisable value of the Asset at any particular point in time.
The Airbus 380-800 is a newly developed generation of aircraft. There is at present not sufficient experience and data to give a complete assessment of the long-term use and operation of the aircraft. There is a risk that the newly developed materials may be found to be less efficient or durable than expected, thereby leading to higher maintenance and repair costs.
The Asset will be insured by Emirates pursuant to the Lease. However, inflation, changes in ordinances, environmental considerations and other factors may make the insurance proceeds insufficient to repair or replace the Asset if it is damaged or destroyed.
A failure by Emirates to comply with its payment obligations under the Lease may lead to a reduction in distributions paid on the Shares and/or in the value of the Shares and have an adverse effect on the Company.
The Company's investment in the Asset is designed to be long-term. The Asset cannot be easily sold or transferred given the nature of the Asset and the absence of a liquid market in aircraft. The market price and value of the Asset may fluctuate due to a…
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