ONE Aviation Corporation

10/9/18

ONE Aviation Corporation, a New Mexico-based OEM of twin-engine light jet aircraft (e.g., the Eclipse jet, a twin-turbofan very light jet or “VLJ”), filed a prepackaged bankruptcy case that will give 97-100% of the equity to its senior prepetition lender, Citiking International US LLC. Holders of senior secured notes will get 3% of the equity and warrants if they check the “yes” vote in the “death trap” plan of reorganization. General unsecured claimants will get a big fat zero and a bunch of court-mandated paper to throw into the recycling bin. Citiking is providing the company with a $17mm DIP credit facility that will roll into an exit facility upon emergence from chapter 11.

The company has $198.8mm of total funded debt, including approximately $53.2mm representing amounts owed to certain state and local governments in the form of development loans. Womp womp.

Why is there a bankruptcy here? The company pursued growth strategies that simply never came to fruition, including targeting the “air taxi” industry and development of new capital-intensive airplane models. The company notes:

That strategy ultimately proved unsuccessful in the near term because, in addition to the negative macro-factors, including the condition of the U.S. and global economies, ONE Aviation was unable to raise the capital needed to complete the new airplane programs. The VLJ market, a market dependent on luxury spending, simply had not recovered from its downturn in 2008.

Liquidity, therefore, became constrained as the company found itself caught between building for the future and sustaining today. After a considerable sales and marketing process conducted by multiple bankers (Guggenheim Securities, first, Duff & Phelps, second) both in the U.S. and internationally, the company had no luck finding strategic or financial buyers. Hence bankruptcy with a plan to convey the company over to the prepetition first lien lender.

• Jurisdiction: D. of Delaware (Judge Sontchi)

• Capital Structure: $58.6mm first lien RCF (Citiking), $43.3mm subordinated secured notes (Bank of New York Mellon Trust Company, N.A.), $20.5mm subordinated unsecured notes

• Company Professionals:

  • Legal: Paul Hastings LLP (Chris Dickerson, Brendan Gage, Nathan Gimpel, Todd Schwartz, Stephen Bandrowsky) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady, M. Blake Cleary, Sean Beach, Jaime Lutan Chapman)

  • Financial Advisor: Ernst & Young LLP (Briana Richards, Brian Yano)

  • Investment Banker: Duff & Phelps Securities LLC (Vineet Batra)

  • Board of Directors: Michael Wyse, Jonathan Dwight, Alan Klapmeier, Kevin Gould, RJ Siegel

  • Claims Agent: Epiq Corporate Restructuring LLC (*click on company name above for free docket access)

• Other Parties in Interest:

  • Administrative Agent & Collateral Agent: Cantor Fitzgerald Securities

    • Legal: Richards Kibbe & Orbe LLP (Gregory Plotko, Christopher Jarvinen) & (local) Ashby & Geddes PA (Gregory Taylor, Stacy Newman)

  • Senior Prepetition Lender: Citiking International US LLC

    • Legal: Emmet Marvin & Martin LLP (Thomas Pitta) & (local) Ashby & Geddes PA (Gregory Taylor, Stacy Newman)

  • Senior Subordinated Secured Noteholders

    • Legal: Manning Gross + Massenburg LLP (Marc Phillips)

Updated 10/9/18 at 5:12pm CT