Fly Leasing Limited (Exact Name of registrant as specified in its charter)

Transcription

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 Date of Report: March 1, 2018 Commission File Number: Fly Leasing Limited (Exact Name of registrant as specified in its charter) West Pier Business Campus Dun Laoghaire County Dublin, A96 N6T7, Ireland (Address of principal executive office) Indicate by check mark whether registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F Form 40-F Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

2 Other Events On February 28, 2018, Fly Leasing Limited ( Fly ) announced that it has entered into definitive agreements with AirAsia Berhad ( AirAsia ) and its subsidiary, Asia Aviation Capital Limited ( AACL ), pursuant to which Fly will acquire 55 Airbus narrowbody aircraft and seven engines on operating leases, between 2018 and Fly also will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in Under the terms of the agreements, Fly will acquire a portfolio of 33 Airbus A aircraft and seven engines on operating leases to AirAsia and its affiliated airlines, and one Airbus A aircraft on operating lease to a third-party airline ( Portfolio A ). AirAsia will receive approximately $1.0 billion in cash and 3,333,333 FLY common shares, valued at $15.00 per share (the Fly Shares ). The Fly Shares will be subject to lock-up restrictions until 2021, as well as voting and standstill undertakings until AirAsia and its affiliates own less than 10% of Fly s outstanding shares. Fly has agreed to register these shares with the Securities and Exchange Commission. The closing of the Portfolio A transaction, which is expected to occur in the second and third quarters of 2018, remains subject to approval by AirAsia shareholders, receipt of regulatory approvals and satisfaction of customary closing conditions. In addition, Fly will acquire 21 Airbus A320neo family aircraft on operating leases to AirAsia and its affiliated airlines as the aircraft deliver from Airbus between 2019 and 2021 ( Portfolio B ). Fly also will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in 2020 ( Portfolio C ). The consummation of the Portfolio B and Portfolio C transactions is conditioned upon the closing of the Portfolio A transaction (collectively, the Portfolio A, Portfolio B and Portfolio C transactions being the Transactions ). Fly has entered into a commitment letter with BNP Paribas, Citi, Commonwealth Bank of Australia and Deutsche Bank (the Underwriters ) pursuant to which the Underwriters have agreed to provide $582.2 million in senior, secured debt financing for the Transactions (the Acquisition Credit Facility ). The Underwriters have agreed to provide $145.5 million under a two-year loan facility, and $436.7 million under a five-year loan facility, subject to the terms and conditions of the commitment letter. The proceeds from the Acquisition Credit Facility will be used to finance the Transactions, except for the acquisition of four aircraft in Portfolio A which are expected to be financed under Fly s existing warehouse facility. Alongside the Transactions, two other capital pools managed and serviced by BBAM Limited Partnership and its subsidiaries ( BBAM ), Nomura Babcock & Brown and Incline Aviation, will acquire an aggregate of 73 Airbus narrowbody aircraft and seven engines on operating lease to AirAsia and its affiliated airlines, four narrowbody aircraft on lease to third-party airlines, and the option to purchase an additional 30 Airbus A320neo family aircraft, not subject to lease, delivering in the future. Finally, Summit Aviation Holdings LLC and an affiliate of Onex Corporation ( Onex ) each have agreed to purchase $10 million of newly issued common shares of Fly, at a purchase price of $15.00 per share. Fly has agreed to register these shares with the Securities and Exchange Commission. The lock-up on existing shares held by Onex will terminate upon issuance and sale of the new Fly shares, and all shares held by Onex at that time will be subject to a 180-day lock-up. 2

3 Forward Looking Statements This report and the exhibits filed herewith include forward-looking statements regarding the Transactions that are not historical or current facts and deal with potential future circumstances and developments, in particular statements regarding whether and when the Transactions and related transactions will be consummated; the amount of cash and stock consideration to be paid by Fly; the type, amount and terms of the acquisition financing to be obtained by Fly; and, the amount of any fees and expenses incurred in connection with the Transactions. Forward-looking statements are qualified by the inherent risks and uncertainties surrounding future expectations generally and may materially differ from actual future experience. Risks and uncertainties that could affect forward-looking statements include: satisfaction of conditions to the closing of the Transactions; satisfaction of conditions to the financing of the Transactions; Fly s ability to obtain additional required financing for the Transactions on favorable terms, or at all; the risk that expected benefits of the Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the Transactions may be greater than expected; and the risks that are described in Fly s reports filed with the SEC, including the annual report on Form 20-F for the year ended December 31, 2016 and the quarterly report on Form 6-K for the nine months ended September 30, This report speaks only as of its date and Fly disclaims any duty to update the information herein other than as required by applicable law or regulation. Exhibits 99.1 Fly Leasing Limited Press Release 99.2 Fly Leasing Limited Investor Presentation 3

4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Fly Leasing Limited (Registrant) Date: March 1, 2018 By: /s/ Colm Barrington Colm Barrington Chief Executive Officer and Director 4

5 EXHIBIT INDEX Exhibit Title 99.1 Fly Leasing Limited Press Release 99.2 Fly Leasing Limited Investor Presentation 5

6 Exhibit 99.1 Fly Leasing to Acquire Major Aircraft Portfolio Dublin, Ireland, February 28, 2018 Fly Leasing Limited ("FLY") (NYSE: FLY) today announced that it has entered into a definitive agreement with AirAsia Berhad ("AAB") (KLSE: 5099) and its subsidiary, Asia Aviation Capital Limited ( AAC ), under which FLY will acquire 54 Airbus narrowbody aircraft and seven CFM engines on lease to AAB and its affiliates (the AirAsia Group ), and one Airbus narrowbody aircraft on lease to a third-party airline. In addition, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in At the closing of the initial stage of the transaction, FLY will acquire 34 Airbus A aircraft and seven aircraft engines. Of these aircraft, which have an average age of 6.6 years and a remaining lease term of 6.2 years, 33 are on lease to five different airlines within the AirAsia Group, and one aircraft is on lease to a third-party airline. In addition to the aircraft acquired in the first stage of the transaction, FLY has agreed to acquire 21 A320neo family aircraft that will be subject to 12-year leases to AirAsia Group airlines. These 21 aircraft are scheduled to deliver new from the manufacturer between 2019 and In the final stage of the transaction, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in Under the terms of the agreement, AAB will receive approximately $1.0 billion in cash and 3,333,333 newly-issued FLY shares at $15.00 per share as part of the initial stage of the transaction. The shares acquired by AAB will be subject to lock-up arrangements through 2021, and voting and standstill agreements, and will be entitled to registration rights. In addition, an affiliate of Onex Corporation ( Onex ) and the management team of BBAM Limited Partnership ( BBAM ) will each acquire 666,667 newly-issued FLY shares at $15.00 per share, for total consideration of $20 million. When added to pre-existing shareholdings by Onex and the BBAM management team, these investors will hold a total of 5.5 million shares, or 17% of the company s proforma outstanding shares. The transaction is expected to close in the second and third quarters of 2018, subject to approval by AAB shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.

7 The transaction is part of a larger acquisition under which FLY, together with BBAM s other capital partners, Nomura Babcock & Brown and Incline Aviation, will acquire a total of 132 aircraft from AAB and its subsidiary AAC, as well as options to acquire 50 A320neo family aircraft, to be delivered in the future. AAB will also make a $50 million investment in Incline Aviation as part of its consideration. FLY s CEO Colm Barrington commented: "We are thrilled to partner with one of Asia s premier and fastest expanding airline groups. These investments will grow FLY s fleet with the most attractive and newest generation of narrowbody aircraft on known lease and financing terms. This transaction is expected to drive high levels of stable, long-term profitability and cash flows at FLY for the benefit of our stakeholders." Tan Sri Tony Fernandes, AirAsia Group Chief Executive Officer, added: "The AirAsia Group is delighted to begin this new, long - term partnership with Steve and the rest of the team at BBAM. BBAM has a similar culture to AirAsia. Steve is a great entrepreneur with a strategic vision and he has built a strong team with great attention to detail that is incredibly passionate about what they do. I am confident that his management team will drive the value of our investment in both FLY and Incline. Mr. Fernandes commented further, This is a perfect outcome to a strategy we started in 2004 and I'm thrilled at the execution of our long-term vision. We have now disposed most of our physical non-core assets and we are thrilled to be embarking on our new digital strategy, which will build a very valuable group of assets. Steve Zissis, Chief Executive Officer of BBAM, commented: BBAM is providing FLY with unique access to a major investment opportunity that FLY would not have been able to pursue on its own. We passionately believe BBAM s unique structure enables us to offer unparalleled fleet planning solutions to our airline customers by enabling us to participate in large scale transactions that few of our peers can deliver. Mr. Zissis further commented, Tony and his team have built an incredible business at AirAsia and we feel fortunate in having this opportunity to build a long-term partnership with an organization of this caliber. Advisors Vedder Price and Jones Day acted as legal advisors to FLY. BNP Paribas, Citi, Commonwealth Bank of Australia and Deutsche Bank have provided committed financing to FLY for the transaction. EY and KPMG acted as tax advisors to FLY. Conference Call and Webcast for Investors and Analysts In connection with the press release, management will host a conference call and webcast with slide presentation to discuss the acquisition on Thursday, March 1, at 9:00 am Eastern Time. Participants should dial (International) or (North America) and enter confirmation code Please call at least five minutes early to allow for connection time.

8 A live webcast with slide presentation will be available on the Events & Presentations page in the Investor Relations section of FLY s website at A webcast replay will be available on the company s website for one year. About FLY FLY is a global aircraft leasing company with a fleet of modern, high-demand and fuel-efficient commercial jet aircraft. FLY leases its aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM and its affiliates, a worldwide leader in aircraft lease management and financing. For more information visit About AirAsia Group AirAsia, the world s leading low-cost carrier group, services an extensive network of over 130 destinations across Asia Pacific. Since starting operations in 2001, AirAsia has carried more than 400 million guests and grown its fleet from just two aircraft to over 200. The airline is proud to be a truly Asean (Association of Southeast Asian Nations) airline with established operations based in Malaysia, Indonesia, Thailand and the Philippines as well as India and Japan, servicing a network stretching across Asia, Australia and New Zealand, the Middle East and the US. AirAsia has been named the World s Best Low-Cost Airline at the annual Skytrax World Airline Awards nine times in a row from 2009 to AirAsia was also awarded World's Leading Low-Cost Airline for the fifth consecutive year at the 2017 World Travel Awards, where it became the inaugural recipient of the World's Leading Low-Cost Airline Cabin Crew award. About BBAM BBAM is the world's largest dedicated manager of investments in leased commercial jet aircraft providing over 200 airline customers in more than 50 countries with fleet and financing solutions over the last three decades. BBAM is the only manager in the aircraft leasing industry focused exclusively on generating investment returns for third-party investors. BBAM currently has more than 400 aircraft under management and employs over 120 professionals at its headquarters in San Francisco and in additional offices in New York, London, Tokyo, Singapore, Zurich, Dublin, and Santiago. For more information about BBAM, please visit its website at About Onex Onex is one of the oldest and most successful private equity firms. Through its Onex Partners and ONCAP private equity funds, Onex acquires and builds high-quality businesses in partnership with talented management teams. At Onex Credit, Onex manages and invests in leveraged loans, collateralized loan obligations and other credit securities. Onex has more than $32 billion of assets under management, including $6.8 billion of Onex proprietary capital, in private equity and credit securities. With offices in Toronto, New York, New Jersey and London, Onex and the team are collectively the largest investors across Onex platforms.

9 Onex businesses have assets of $47 billion, generate annual revenues of $30 billion and employ approximately 162,000 people worldwide. Onex shares trade on the Toronto Stock Exchange under the stock symbol ONEX. For more information on Onex, visit its website at Cautionary Statement Regarding Forward-Looking Statements This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements may be identified by words such as expects, intends, anticipates, plans, believes, seeks, estimates, will, or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY s future business, operations and financial performance, including the expected benefits of the transaction; whether and when the transactions described herein (the Transactions ) will be consummated; the amount of cash and stock consideration to be paid by FLY; the type, amount and terms of the acquisition financing to be obtained by FLY; and, the amount of any fees and expenses incurred in connection with the Transactions. Forward-looking statements are based on management s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks, including risks relating to the satisfaction of conditions to the closing of the Transactions; risks relating to satisfaction of conditions to the financing of the Transactions; risks relating to FLY s ability to obtain additional required financing for the Transactions on favorable terms, or at all; the risk that expected benefits of the Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the Transactions may be greater than expected; and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Further information on the factors and risks that may affect FLY s business is included in filings FLY makes with the Securities and Exchange Commission (the SEC ) from time to time, including its Annual Report on Form 20-F and its Reports on Form 6-K. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise. Contact: Matt Dallas Fly Leasing Limited ir@flyleasing.com # # #

10 Exhibit 99.2

11 disclaimer Forward-Looking Statements: This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements may be identified by words such as expects, intends, anticipates, plans, believes, seeks, estimates, will, or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY s future business, operations and financial performance, including the expected benefits of the transaction; whether and when the transactions described herein (the Transactions ) will be consummated; the amount of cash and stock consideration to be paid by FLY; the type, amount and terms of the acquisition financing to be obtained by FLY; and, the amount of any fees and expenses incurred in connection with the Transactions. Forward-looking statements are based on management s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks, including risks relating to the satisfaction of conditions to the closing of the Transactions; risks relating to satisfaction of conditions to the financing of the Transactions; risks relating to FLY s ability to obtain additional required financing for the Transactions on favorable terms, or at all; the risk that expected benefits of the Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the Transactions may be greater than expected; and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Further information on the factors and risks that may affect FLY s business is included in filings FLY makes with the Securities and Exchange Commission (the SEC ) from time to time, including its Annual Report on Form 20-F and its Reports on Form 6-K. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise. Note: Share repurchase data and fleet statistics as of December 31, 2017.

12 Next Step to Driving Higher ROE and Eps Transformed fleet by selling 72 aircraft with average age of 13.2 years since the start of 2015; Second youngest fleet among public lessors Fly has been patiently waiting for compelling risk-adjusted aircraft investments Reduced management fees and other expenses; Adjusted SG&A redu ced by 7% as of Q3-17 (year-over-year) Acquired 32% of shares at average share price of $13.17 (31% discount to Q3-17 book value) since Reduced secured and unsecured debt cost and extended debt maturitiessold Older and Under-Performing Aircraft Reinvesting in Newer, Higher Yielding Assets Reduced SG&A Repurchased Shares at a Discount to Book Value Actively Managed Liabilities September 30, 2015

13 AirAsia Portfolio Acquisition Initial Portfolio Investments Future Sale-Leaseback Investments Orderbook Option Opportunity 34 A aircraft Leased to five AirAsia Group airlines in five different countries (1) 6.6 year weighted average age 6.2 year weighted average remaining lease term Seven aircraft engines on lease to AirAsia Group Aggregate base purchase price of $1.1 billion 21 A320neo family aircraft New aircraft delivering from Airbus 12 year lease term Will be leased to AirAsia Group airlines Scheduled to deliver from Airbus between Option to acquire at FLY s sole discretion up to 20 A320neo family aircraft Naked aircraft not subject to lease Delivering from Airbus starting in 2019 BBAM will market these aircraft to its airline customers globally

14 Transaction Details Under the terms of the sale and purchase agreement, AirAsia Berhad ( AAB ) will receive: $1.0 billion in cash (a combination of secured debt and unrestricted cash) 3,333,333 newly-issued FLY shares at $15.00 per share Represents a 29% premium to current share price (1) Significant alignment of interest between FLY s largest shareholder and its largest obligor AAB shares will be locked-up through 2021 In addition, Onex and BBAM s management team will each acquire 666,667 newly-issued FLY shares at $15.00 per share, for total consideration of $20 million 17% will be owned by BBAM shareholders on a proforma basis Closing is subject to AAB shareholder approval and certain regulatory approvals as well as customary closing conditions No FLY shareholder vote is required The transaction is anticipated to close in Q2 and Q3 2018

15 SIGNIFICANT EMBEDDED AIRCRAFT VALUE IN ORDERBOOKFavorable pricing on orderbook of newest-generation narrowbodies that is sold out over 8 yearsno pre-delivery payment requirement enhances returns and boosts liquidity profile ACCESS TO THE NEWEST TECHNOLOGYProforma for the transaction, 33% of assets will be newest generationtechnology(1) COMPELLING INVESTMENT RETURNSStable long-term, predictable earnings projections (projected EPS of $2.50+/year)Prudently capitalized, providing solid support for contracted orders and rapid deleveraging STRATEGIC RATIONALE FOR ACQUISITION IMMEDIATE SCALE AND CONTRACTED GROWTHTransforms FLY s fleet and growth prospects Orderbook placed to identified lessees at attractive lease rates provides identified growth Pro forma for FLY, Initial Portfolio and SLB Investments on a combined basis. For FLY, weighted by NBV as of December 31, For Initial Portfolio and SLB Investments, weighted by estimated purchase price allocation, excluding engines.

16 High level proforma financial impact Annual Operating Lease Revenue Run-Rate EPS Unrestricted Cash at Closing t at Closing Equity at Closing Proforma Share Count $400+ million $2.50+ ~$145 million ~$3 billion ~$640 million(1) ~33 million

17 Proforma capital structure Initial 34 aircraft acquired at closing will be financed with ~$580 million of committed staple financing and ~$90 million from FLY s existing aircraft acquisition facility FLY will temporarily increase its leverage to absorb the acquisition Planned reduction in leverage is underpinned by significant contracted amortization, a sales strategy to reduce AirAsia Group exposure and manage FLY s debt / equity ratio FLY will continue to target a debt / equity ratio in the 3.0x 3.5x range FLY s capital structure employs more secured debt than its peers which has more scheduled deleveraging and less point-in-time refinancing risk

18 BBAM is a world leader in aircraft management with over 200 airline relationships BBAM PARTNERSHIP DRIVES HIGHER RETURNS The acquisition is part of a larger transaction with participation of other BBAM-managed capital pools:combined buying power of the BBAM franchise drives above-market investment returnsdistributes credit riskminimizes third party capital requirements and lowers leverage for FLYAircraft were allocated among investors taking into consideration capital capacity, age, lease term, aircraft type and lessee

19 future Growth opportunities Estimated Delivery Timing Strong Pipeline of New Technology Aircraft

20 Future SLB Investments Orderbook Option Opportunity Aircraft 10 A320neo and 11 A321neo 20 A320neo/A321neo Lessees AirAsia Group airlines Naked Delivery (schedule below) Lease Term 12 years - ATTRACTIVE ORDERBOOK FLY benefits from AirAsia s preferential pricing No PDPs = Enhanced returns Attractive orderbook Future SLB Investments Orderbook Option Opportunity FLY benefits from AirAsia s preferential pricing No PDPs = Enhanced returns

21 High-quality, young portfolio acquired at closing, with the sale-leaseback NEO portfolio providing identified growth at attractive prices The orderbook options offer further growth and lessee diversification Catalyst for FLY s transition to newest technology equipment Geographical Split(1) Asset Type(1 Note: All proforma data is weighted by NBV. Pro forma for FLY, Initial Portfolio and SLB Investments on a combined basis. For FLY, NBV as of December 31, For Initial Portfolio, estimated purchase price allocation and weighting as of January 1, 2018, excluding engines. For SLB Investments, assumes all investments made as of January 1, 2018

22 DIVERSE GROUP OF GLOBAL LESSEES FLY Top 10 Lessees Initial Portfolio Proforma Top 10 Lessees (1) AirAsia Group (currently five different airlines in five countries) exposure will decline with a disciplined disposition strategy. FLY is targeting ~$150 million of AirAsia Group sales annually Pro forma for FLY and Initial Portfolio on a combined basis. For FLY, NBV as of December 31, For Initial Portfolio, estimated purchase price allocation but excluding engines.

23 AirAsia Group Overview AirAsia Group is the largest low-cost carrier in Asia and fourth largest airline in Asia in terms of passengers carried. The group is diversified across five countries and has access to independent capital three of the entities are listed on local stock exchanges

24 Q&A

25 appendix

26 Initial Portfolio Lessees Aircraft Age Lease Maturity Profile Weighted Average Remaining Lease Term of 6.2 years Note: Percentages reflect average full-life current market value from three appraisers. Excludes engines.

27 Asset allocation snapshot Initial Portfolio Future SLB Investments Orderbook Option Opportunity FLY Asset Allocation Incline Asset Allocation NBB Asset Allocation Note: Incline will acquire three additional narrowbody aircraft from AAB which are not included in the above asset allocation.

28 SHARE ISSUANCE GOVERNANCE TERMS FLY Issuance: AAB will acquire 3.3 million newly-issued shares (10%) at $15.00 per shareonex and BBAM management team will each acquire 666,667 newly-issued shares at $15.00 per share Lock-up Period AAB s shares will be subject to lock-up arrangements through the delivery of the final SLB investment (2021) Governance Arrangements AAB will enter into a shareholder agreement providing that:aab will enter into voting and standstill agreements for as long as it owns 10%+ of FLY s outstanding shares