===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13E-3
Rule 13E-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
-----------------------
Indigo Aviation AB
(Name of Issuer)
-----------------------
AerFi Group plc
AerFi Sverige AB
(Name of Person(s) Filing Statement)
-----------------------
American Depositary Shares each representing one Ordinary Share,
SEK 3.14 Nominal Value
(Title of Class of Securities)
-----------------------
45567P104
(CUSIP Number of Class of Securities)
-----------------------
Rose Hynes, Esquire Sven Holmgren
General Counsel Vice President and Corporate Counsel
AerFi Group plc Indigo Aviation AB
Aviation House Sodra Forstadsgatan 4
Shannon, Ireland S-211 43 Malmo
011-353-61-360-000 Sweden
011-46-40-660-3001
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
-----------------------
With Copies to:
Thomas J. Reid, Esquire Kenneth C. Hoffman, Esquire
Davis Polk & Wardwell Greenberg Traurig, P.A.
1 Frederick's Place 1221 Brickell Avenue
London EC2R 8AB Miami, Florida 33131
England (305) 579-0500
011-44-171-418-1300
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [X] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
===============================================================================
Transaction Valuation* Amount of Filing Fee**
- -------------------------------------------------------------------------------
$40,023,360 $8,004.67
===============================================================================
* Calculated by multiplying $13.00, the per share tender offer price, by
3,078,720, which represents (i) the number of ordinary shares outstanding
on November 11, 1999 (ii) minus the ordinary shares exchanged by certain
shareholders pursuant to a separate share exchange agreement with AerFi
Group plc (iii) minus the ordinary shares sold by certain shareholders
pursuant to a separate share purchase agreement with AerFi Sverige AB.
** Calculated as 1/50 of 1% of the transaction value.
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
<TABLE>
<S> <C> <C>
Amount previously paid $8,004.67 Filing party: AerFi Group plc, AerFi Sverige AB
Form or registration no.: Schedule 14D-1 Date filed: November 17, 1999
</TABLE>
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<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 is being filed by
(i) AerFi Group plc or AerFi, an Irish limited liability company, (ii) AerFi
Sverige AB or AerFi Sverige, a Swedish corporation and an indirect,
wholly-owned subsidiary of AerFi and (iii) Indigo Aviation AB or Indigo, a
Swedish limited liability company, pursuant to Section 13(e) of the Securities
Exchange Act of 1934, as amended, and Rule 13e-3 thereunder in connection with
the tender offer by AerFi Sverige for any and all issued and outstanding
ordinary shares nominal value SEK 3.14 per share and (without duplication) the
American depositary shares each representing one ordinary share, of Indigo
Aviation AB upon the terms and subject to the conditions set forth in the offer
to purchase dated November 17, 1999 and the related letter of transmittal
(which together constitute the offer), copies of which are filed as Exhibits
(d)(1) and (d)(2) hereto, respectively. The offer is not being made with
respect to 72.7% of Indigo's issued and outstanding shares which are owned by
certain shareholders of Indigo who have agreed to exchange/sell those shares to
AerFi and AerFi Sverige in a separate transaction under a share exchange
agreement and a share purchase agreement.
The following Cross Reference Sheet, prepared pursuant to General
Instruction F to Schedule 13E-3, shows the location in the Tender Offer
Statement on Schedule 14D-1 filed by AerFi and AerFi Sverige with the
Securities and Exchange Commission on the date hereof of the information
required to be included in this Schedule 13E-3. The information set forth in
the Schedule 14D-1, including all exhibits thereto, is hereby expressly
incorporated herein by reference as set forth in the Cross Reference Sheet and
the responses in this Schedule 13E-3, and such responses are qualified in their
entirety by reference to the information contained in the offer to purchase and
the schedules and annexes thereto.
The information contained in this Schedule 13E-3 concerning Indigo,
including, without limitation, the deliberations of Indigo's board of directors
in connection with the transaction, the opinion of Indigo's financial advisor
and Indigo's capital structure and historical financial statements and
projections, was supplied by Indigo. None of AerFi or AerFi Sverige takes
responsibility for the accuracy of such information. The information contained
in this Schedule 13E-3 concerning AerFi and AerFi Sverige was supplied by AerFi
and AerFi Sverige. Indigo takes no responsibility for the accuracy of such
information.
2
<PAGE>
CROSS REFERENCE SHEET
WHERE LOCATED
ITEM IN SCHEDULE 13E-3 IN SCHEDULE 14D-1
- ---------------------- -----------------
Item 1(a)......................................................... Item 1(a)
Item 1(b)......................................................... Item 1(b)
Item 1(c)......................................................... Item 1(c)
Item 1(d)......................................................... *
Item 1(e)......................................................... *
Item 1(f)......................................................... *
Item 2(a)......................................................... Item 2(a)
Item 2(b)......................................................... Item 2(b)
Item 2(c)......................................................... Item 2(c)
Item 2(d)......................................................... Item 2(d)
Item 2(e)......................................................... Item 2(e)
Item 2(f)......................................................... Item 2(f)
Item 2(g)......................................................... Item 2(g)
Item 3(a)(1)...................................................... Item 3(a)
Item 3(a)(2)...................................................... Item 3(b)
Item 3(b)......................................................... *
Item 4............................................................ *
Item 5............................................................ Item 5
Item 6(a)......................................................... Item 4(a)
Item 6(b)......................................................... *
Item 6(c)......................................................... Item 4(b)
Item 6(d)......................................................... *
Item 7(a)......................................................... Item 5
Item 7(b)......................................................... *
Item 7(c)......................................................... *
Item 7(d)......................................................... *
Item 8............................................................ *
Item 9............................................................ *
Item 10........................................................... Item 6
Item 11........................................................... Item 7
Item 12........................................................... *
Item 13........................................................... *
Item 14........................................................... *
Item 15(a)........................................................ *
Item 15(b)........................................................ Item 8
Item 16...........................................................Item 10(f)
Item 17........................................................... Item 11
- -------------------
* The Item is located in the Schedule 13E-3 only.
3
<PAGE>
Item 1. Issuer and Class of Security Subject to the Transaction
(a)-(c) The response to Item 1(a)-(c) of the Schedule 14D-1 is
incorporated herein by reference.
(d) The information set forth in the offer to purchase under
"Introduction", "Special Factors--The Combination Agreement" and "The Tender
Offer--Price Range of Shares; Dividends" is incorporated herein by reference.
(e) The information set forth in the offer to purchase under
"Introduction" is incorporated herein by reference.
(f) The following table sets forth the number of shares purchased by
affiliates of Indigo since April 9, 1998, and the range of prices paid for the
shares purchased:
Price Range
--------------------
Total Shares High Low
------------ --------- --------
Volito AB 274,888 $ 8.776 $ 6.625
ABAxel Granlund 19,000 11.250 6.092
Braganza AS 320,500 7.000 6.625
Arne Wennberg 64,500 8.500 6.875
Industrifinans SMB II ASA 126,100 11.970 6.450
Industrifinans SMS III ASA 148,800 7.950 7.813
David Neeleman 9,000 13.000 7.875
The following table sets forth the average purchase price for shares
purchased by each of the affiliates listed, for each Indigo fiscal quarter in
which that affiliate made purchases:
<TABLE>
1998 1999
-------------------------------- -------------------------------------------
Second Third Fourth First Second Third Fourth
Quarter(1) Quarter Quarter Quarter Quarter Quarter Quarter(2)
---------- ------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Volito AB $ - $ 8.33 $ 7.61 $ 7.23 $ - $ - $ -
AB Axel Granlund 11.25 6.09 8.48 7.75 - - -
Braganza AS - - 6.82 7.00 - - -
Arne Wennberg - - 7.45 - - - -
Industrifinans 9.00
SMB II ASA
Industrifinans 7.92
SMB III ASA
David Neeleman 13.00 7.97 - - - - -
- -------------------
(1) from April 9, 1998.
(2) through November 15, 1999.
</TABLE>
4
<PAGE>
Item 2. Identity and Background
(a)-(d) and (g) This Statement is filed jointly by Indigo, AerFi and AerFi
Sverige. The answer to Item 2(a)-(d) and (g) of the Schedule 14D-1 is
incorporated herein by reference. One of the persons filing this Statement is
the issuer of the class of equity securities which is the subject of the Rule
13e-3 transaction. The information set forth in the offer to purchase under
"The Tender Offer-Certain Information Concerning Indigo" and Schedule I thereto
is incorporated herein by reference.
(e) and (f) The answer to Item 2(e) and (f) of the Schedule 14D-1 is
incorporated herein by reference. To the best knowledge of Indigo, during the
last five years, neither Indigo nor any of the persons listed in Schedule I of
the offer to purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining further violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
Item 3. Past Contacts, Transactions or Negotiations
(a)-(b) The response to Item 3(a) and (b) of the Schedule 14D-1 is
incorporated herein by reference.
Item 4. Terms of the Transaction
(a) The information set forth in the offer to purchase on the cover page
thereof and under "Introduction", "Special Factors--Background of the Offer",
"Special Factors--The Combination Agreement", "Special Factors--The Share
Exchange Agreement", "Special Factors--The Share Purchase Agreement", "The
Tender Offer--Terms of the Offer", "The Tender Offer--Acceptance for Payment
and Payment for Shares", "The Tender Offer--Procedures for Accepting the Offer
and Tendering Shares", "The Tender Offer--Withdrawal Rights", "The Tender
Offer--Dividends and Distributions", "The Tender Offer--Certain Conditions of
the Offer" and "The Tender Offer--Certain Legal Matters; Regulatory Approvals"
is incorporated herein by reference.
(b) The information set forth in the offer to purchase under "Special
Factors--Interests of Certain Persons in the Offer" is incorporated herein by
reference.
Item 5. Plans or Proposals of the Issuer or Affiliate
(a)-(e) The response to Item 5(a)-(e) of the Schedule 14D-1 is
incorporated herein by reference.
(f) and (g) The response to Item 5(f) and (g) of the Schedule 14D-1 is
incorporated herein by reference.
Item 6. Source and Amount of Funds or Other Consideration
(a) The response to Item 4(a) of the Schedule 14D-1 is incorporated herein
by reference.
(b) The information set forth in the Offer to Purchase under "The Tender
Offer--Fees and Expenses" is incorporated herein by reference.
(c) The response to Item 4(b) of the Schedule 14D-1 is incorporated herein
by reference.
(d) Not applicable.
5
<PAGE>
Item 7. Purpose(s), Alternatives, Reasons and Effects
(a) The information set forth in the offer to purchase under "Special
Factors--Purpose and Structure of the Offer; Reasons of AerFi for the Offer",
"Special Factors--Plans for Indigo after the Offer" and "Special
Factors--Position of AerFi and AerFi Sverige Regarding Fairness of the Offer"
is incorporated herein by reference.
(b) The information set forth in the offer to purchase under "Special
Factors--Background of the Offer", "Special Factors--Recommendation of Indigo's
Board of Directors; Fairness of the Offer", "Special Factors-Opinion of
Financial Advisor to Indigo's Board of Directors" and "Special Factors--Purpose
and Structure of the Offer; Reasons of AerFi for the Offer" is incorporated
herein by reference.
(c) The information set forth in the offer to purchase under
"Introduction", "Special Factors--Background of the Offer", "Special
Factors--Recommendation of Indigo's Board of Directors; Fairness of the Offer",
"Special Factors--Purpose and Structure of the Offer; Reasons of AerFi for the
Offer", "Special Factors--Position of AerFi and AerFi Sverige Regarding
Fairness of the Offer" "Special Factors-Opinion of Financial Advisor to
Indigo's Board of Directors", and "Special Factors--Plans for Indigo After the
Offer" is incorporated herein by reference.
(d) The information set forth in the offer to purchase under
"Introduction", "Special Factors--Background of the Offer", "Special
Factors--Recommendation of Indigo's Board of Directors; Fairness of the Offer",
"Special Factors--Purpose and Structure of the Offer; Reasons of AerFi for the
Offer", "Special Factors--Position of AerFi and AerFi Sverige Regarding
Fairness of the Offer", "Special Factors--Plans for Indigo After the Offer",
"Special Factors--Interests of Certain Persons in the Offer", "The Tender
Offer--United States Federal Income Tax Consequences" and "The Tender
Offer--Certain Effects of the Offer" is incorporated herein by reference.
Item 8. Fairness of the Transaction
(a)-(e) The information set forth in the offer to purchase under
"Introduction", "Special Factors--Background of the Offer", "Special
Factors--Recommendation of Indigo's Board of Directors; Fairness of the Offer",
"Special Factors-Opinion of Financial Advisor to Indigo's Board of Directors",
"Special Factors--Position of AerFi and AerFi Sverige Regarding Fairness of the
Offer" and "Special Factors--Purpose and Structure of the Offer; Reasons of
AerFi for the Offer" is incorporated herein by reference.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals And Certain Negotiations
(a)-(c) The information set forth in the offer to purchase under "Special
Factors--Background of the Offer", "Special Factors--Recommendation of Indigo's
Board of Directors; Fairness of the Offer", "Special Factors--Opinion of
Financial Advisor to Indigo's Board of Directors" and "Special
Factors--Position of AerFi and AerFi Sverige Regarding Fairness of the Offer"
and Exhibit (b)(1) hereto is incorporated herein by reference. The opinion of
Bear Sterns & Co. Inc. to Indigo's board of directors is included as Annex A to
the offer to purchase.
Item 10. Interest in Securities of the Issuer
(a) and (b)The response to Item 6 of the Schedule 14D-1 is incorporated
herein by reference.
Item 11. Contracts, Arrangements or Understandings with Respect to the Issuer's
Securities
The response to Item 7 of the Schedule 14D-1 is incorporated herein by
reference.
6
<PAGE>
Item 12. Present Intention and Recommendation of Certain Persons with Regard to
the Offer
(a) and (b) The information set forth in the offer to purchase under
"Introduction", "Special Factors--Background of the Offer", "Special
Factors--Recommendation of Indigo's Board of Directors; Fairness of the Offer"
and "Special Factors--Interests of Certain Persons in the Offer" is
incorporated herein by reference.
Item 13. Other Provisions of the Offer
(a) The information set forth in the offer to purchase under "Special
Factors--Rights of Shareholders in the Offer", "Special Factors--The
Combination Agreement" and in Exhibits (c)(2) and (e) to this Schedule 13E-3 is
incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information
(a) The information set forth in the offer to purchase under "The Tender
Offer--Certain Information Concerning Indigo" and "The Tender Offer--Price
Range of Shares; Dividends" is incorporated herein by reference.
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized
(a) The information set forth in the offer to purchase under "Special
Factors--Background of the Offer", "Special Factors--Recommendation of Indigo's
Board of Directors; Fairness of the Offer", "Special Factors--Plans for Indigo
After the Offer" and "The Tender Offer--Certain Effects of the Offer" is
incorporated herein by reference.
(b) The response to Item 8 of the Schedule 14D-1 is incorporated herein by
reference.
Item 16. Additional Information
The response to Item 10(f) of the Schedule 14D-1 is incorporated herein by
reference.
Item 17. Material to Be Filed as Exhibits
(a) Not applicable.
(b)(1) Opinion of Bear Stearns & Co. Inc. dated November 11, 1999.
(Included as Annex A to Exhibit (d)(1))*
(b)(2) Presentation of Bear Stearns & Co. Inc. to Indigo's board
of directors on November 9, 1999.
(c)(1) Combination Agreement, dated as of November 11, 1999,
among Indigo, AerFi and AerFi Sverige.*
(c)(2) Share Exchange Agreement, dated as of November 11, 1999,
among AerFi and certain shareholders of Indigo.*
(c)(3) Share Purchase Agreement dated as of November 11, 1999, among
AerFi, AerFi Sverige and certain shareholders of Indigo.*
7
<PAGE>
(c)(4) Option Agreement, dated November 11, 1999, among AerFi and certain
shareholders of Indigo.*
(c)(5) Registration Rights Agreement, dated November 11, 1999,
among AerFi and certain shareholders of Indigo.*
(c)(6) Tag-Along Rights Agreement, dated November 11, 1999, among Texas
Pacific Group, AerFi and certain shareholders of Indigo.*
(c)(7) Letter, dated November 9, 1999, addressed to Karl-Axel Granlund
from Industrifinans SMB III ASA.*
(d)(1) Offer to Purchase dated November 17, 1999.*
(d)(2) Letter of Transmittal sent to holders of Indigo shares.*
(d)(3) Notice of Guaranteed Delivery.*
(d)(4) Letter from Greenhill & Co., LLC to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.*
(d)(5) Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.*
(d)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.*
(d)(7) Summary Advertisement as published in The New York Times
on November 17, 1999.*
(d)(8) Text of Press Release issued by AerFi on November 11, 1999.*
(e)(1) Certain Provisions of Chapter 14 of the Swedish Companies
Act of 1975 (English translation).
(f) Not applicable.
- -------------------
* Filed as an exhibit to the Statement on Schedule 14D-1 filed by AerFi and
AerFi Sverige on November 17, 1999, and incorporated herein by reference.
<PAGE>
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
November 17, 1999
AERFI GROUP PLC
By: /s/ Patrick Blaney
-------------------------------------
Name: Patrick Blaney
Title: Chief Executive Officer
AERFI SVERIGE AB
By: /s/ John Redmond
-------------------------------------
Name: John Redmond
Title: Director
INDIGO AVIATION AB
By: /s/ Bradley M. Winograd
-------------------------------------
Name: Bradley M. Winograd
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(b)(2) Presentation of Bear Stearns & Co. Inc. to Indigo's board of
directors on November 9, 1999.
(e)(1) Certain Provisions of Chapter 14 of the Swedish Companies Act
of 1975 (English translation).
Exhibit (b)(2)
------------------
Presentation to the Board of Directors of
Indigo Aviation AB
CONFIDENTIAL DRAFT
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Table of Contents
Section
-----------------------------------------------------------------------------
1 Overview of Transaction
2 Cash Offer Analysis
3 Share Exchange Analysis
-----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT
<PAGE>
------------------
Section 1
Overview of Transaction
CONFIDENTIAL DRAFT
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Executive Summary
AerFi Group PLC ("AerFi") has offered to purchase the common shares of Indigo
currently held by the public plus a portion of the shares owned by management
and other non-public stockholders and will exchange the remaining shares for
shares in AerFi.
<TABLE>
-------------------------------------------------------------------------------------------
<S> <C>
Acquiror: AerFi Group PLC
Shares Acquired for Cash: 5.38 million
Less: Public Shares Acquired: 3.00 million
Non-Public Shares Acquired for Cash: 2.38 million
Price Per Share: $13.00
Total Cash Offered: $70 million
Shares Exchanged for AerFi Shares: 5.89 million
Exchange Ratio: 3.7:1
Total AerFi Shares Issued: 21.8 million
Total AerFi Options Issued: 1.0 million ($3.17 strike price)
Pro Forma AerFi Shares Outstanding: 188.1 million (including existing options)
Transaction Multiples(1):
Price/1999E EPS 10.2x
Price/2000E EPS 9.5x
Price/Book Value 1.4x
Premium to Market(2) 48.0%
-------------------------------------------------------------------------------------------
- ------------
(1) Based on the Cash Consideration.
(2) As of November 4, 1999.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 1
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Additional Terms
- --------------------------------------------------------------------------------
Special Dividend Immediately prior to the Transaction, AerFi shall
declare and pay a special dividend of $0.60 per
share ($72 million total) to existing AerFi
shareholders and reduce the strike price on other
existing options by $0.60 per share
Breakup Fee $5 million
Closing Conditions Subject, but not limited to:
o Approval of AerFi Board of Directors
o Acceptances representing 90% of the shares
of Indigo
o Termination of the HSR waiting period
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 2
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Ownership Analysis
The following table summarizes the change in ownership that results from the
AerFi transaction.
<TABLE>
Ownership Summary (in thousands)
- ------------------------------------------------------------------------------------------------------
Current(1) After AerFi Purchase
-------------------- --------------------------
Shares
Name Position Shares Percent Cash Received Received
- -------------------------------- -------- ------ ------- ------------- --------
<S> <C> <C> <C> <C> <C>
Karl-Axel Granlund Chairman 939 8.4%
Volito (67% owned by Granlund) Chairman 2,379 21.2 TO BE
Braathens Lease Director 1,686 15.0 DETERMINED
QueQuoin/Jan-Eric Osterlund Director 944 8.4
Industrilinans Director 851 7.6
John Evans CEO 1,200 10.7
Brad Winograd CFO 224 2.0
Public Shareholders 3,021 26.9 39,273 0
------ ---- ------ ------
11,245 100.0% 70,000 24,000
Operating Management 1,424 12.7%
Chairman & Other Non-Management
Private Holders 6,799 60.5%
- ------------------------------------------------------------------------------------------------------
- ------------
(1) At 12/31/98 per management records.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 3
<PAGE>
------------------
Section 2
Cash Offer Analysis
CONFIDENTIAL DRAFT
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Historical Price Performance
After briefly trading above its IPO price, shares of Indigo have traded between
$6.00 and $9.00 since the beginning of the year
- --------------------------------------------------------------------------------
Chart here...
- --------------------------------------------------------------------------------
Date Volume High Low Close
---------- ------ ---- --- -----
Oct-99 673,200 $9.00 $7.00 $7.03
Sep99 571,000 9.81 8.00 9.00
Aug99 663,300 8.97 7.13 8.50
July99 673,400 9.06 6.63 7.88
June99 1,024,800 9.00 6.38 6.63
May99 598,100 8.00 7.38 7.75
Apr99 879,700 8.88 5.75 7.75
Mar99 680,500 8.38 6.00 7.25
Feb99 505,700 7.63 6.56 7.50
Jan99 217,000 8.13 6.75 7.50
Dec98 1,238,900 8.94 6.00 8.25
Nov98 106,400 10.00 8.13 8.50
Oct98 361,200 9.00 6.56 8.50
Sep98 817,400 9.50 7.31 8.63
Aug98 900,500 12.38 5.88 7.75
Jul98 380,000 12.75 9.88 11.63
Jun98 3,147,600 11.88 9.25 10.88
May98 794,600 14.88 11.50 11.50
Apr98 4,283,200 15.38 12.63 13.38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 4
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Price Performance: IAAB vs. IAIS
Indigo stock has performed in line with the most comparable public company. . .
- --------------------------------------------------------------------------------
Insert Chart here
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 5
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Commercial Finance Company Price Performance
... and in line with a broader group of other small cap commercial finance
companies.
- --------------------------------------------------------------------------------
Insert chart here
- --------------------------------------------------------------------------------
- ------------
(1) Small-cap commercial finance companies include HCF, FIF, UCP, MFI, REXI,
TAXI, FMAX, DVI, WLFC, TWFC, LNCC, HPSC, KBK, IAIS.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 6
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Financial Summary
<TABLE>
Income Statement ($ in thousands)
- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------
LTM as of
1994 1995 1996 1997 1998 9/30/99
------ ------ ------ ------ ------ ---------
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Rental of flight equipment $5,507 $8,118 $24,012 $30,735 $49,918 $85,027
Flight equipment marketing 365 1,192 4,917 7,169 8,923 7,179
Income from equity investments - 190 - - - -
Interest and other 90 525 1,846 2,700 4,599 3,473
------ ------- ------- ------- ------- ------
Total revenues $5,962 $10,025 $30,775 $40,604 $63,440 95,679
Expenses:
Interest $1,752 $3,696 $12,246 $15,780 $24,078 37,544
Depreciation 2,802 3,212 9,320 11,542 18,159 30,814
Selling, general and administrative 233 1,126 2,205 3,035 5,647 6,790
Other (88) 434 (167) (337) 9 3,209
------ ------- ------- ------- ------- ------
Total expenses $4,699 $8,468 $23,604 $30,020 $47,893 78,357
Income before minority interest and taxes $1,263 $1,557 $7,171 $10,584 $15,547 17,322
Minority interest - 400 - - - -
Income taxes (344) (450) (1,887) (2,943) (4,414) (4,547)
------ ------- ------- ------- ------- ------
Net income 919 1,507 5,284 7,641 11,133 12,775
E.P.S. $0.23 $0.37 $0.96 $1.23 $1.07 $1.11
E.P.S. before marketing income $0.16 $0.16 $0.31 $0.41 $0.45 $0.49
Marketing as a % of pre-tax income 28.9% 76.6% 68.6% 67.7% 57.4% 41.4%
------------------------------------------------------------------------------------------------------------------------
Balance Sheet ($ in thousands)
------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------
1994 1995 1996 1997 1998 9/30/99
------ ------ ------ ------ ------ ---------
Flight equipment under operating leases, net $38,819 $77,606 $165,056 $258,620 $532,311 $718,128
Total assets 43,332 90,090 194,453 305,342 586,061 776,033
Total debt 35,930 73,502 163,493 241,471 452,629 615,652
Shareholders' equity 4,377 10,104 16,154 38,603 90,036 101,083
------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 7
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Aircraft Lessors
International Aircraft Investors (IAIS) has a similar primary business line of
leasing and selling jet aircraft and therefore is the most comparable public
company to Indigo
($ in millions)
- --------------------------------------------------------------------------------
International Indigo
Aircraft Transaction
Investors Indigo Multiples
------------- -------- -----------
Data as of: 9/30/99 9/30/99
Price as of 11/4/99 $7.00 $8.78
Market capitalization 29.5 99.0
P/1999E(3) 7.9x 6.9x 10.2x
P/2000E(3) 6.8 6.4 9.5
P/Book Value 0.8 1.0 1.4
P/Tangible Book 0.8 1.0 1.4
P/MRQA before remarketing income(2) 7.3 12.3 18.2
Income Statement (LTM)
Total revenues $37.6 $95.7
Interest 15.3 37.5
Depreciation 13.8 30.8
Total expenses 31.2 78.4
Income before income taxes 6.4 17.3
Income tax expense (2.1) (4.5)
Extraordinary item (0.2) -
Net income $4.1(1) $12.8
------------ -----------
E.P.S. (diluted) $0.94 $1.11
Balance Sheet
Total assets $319.9 $776.0
Total liabilities 282.3 675.0
Total shareholders' equity 37.6 101.1
Tangible Equity/Assets 11.7% 13.0%
Debt/Tangible Equity 6.7x 6.1x
LTM ROAA 1.5% 2.1%
LTM ROAE 11.3 13.5
- --------------------------------------------------------------------------------
- ------------
(1) Income statement data includes cumulative effect of an accounting change of
$209,000 in 1998 and $214,263 extraordinary loss in 1999.
(2) Most recent quarter's net income annualized.
(3) Source: First Call estimate and Fact Set.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 8
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Transportation Related Commercial
Finance Companies
<TABLE>
($ in millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Indigo
Willis Lease Rollins Truck Transaction
Finance Corp. XTRA Corp. Leasing Corp. Interpool, Inc. Median Indigo Multiples
------------- ---------- ------------- --------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Data as of: 9/30/99 6/30/99 9/30/99 6/30/99 9/30/99
Price as of 11/4/99 $7.31 $42.19 $10.31 $8.25 $8.78
Market capitalization 54.1 559.8 591.6 227.5 99.0
P/1999E (4) NM 10.0x(2) 10.3x 7.3x 10.0x 6.9x 10.2x
P/2000E(4) 4.6x 6.8x(2) 9.0 6.5 6.7 6.4 9.5
P/Book Value 0.8 1.6 1.8 0.8 1.2 1.0 1.4
P/Tangible Book 0.8 1.6 1.9 0.8 1.2 1.0 1.4
Income Statement (LTM)
Total revenues $98.4 $462.0 $627.4 $206.8 $95.7
Interest 21.5 57.0 55.4 65.7 37.5
Depreciation 12.6 152.0 192.1 48.1 30.8
Total expenses 91.2 401.0(1) 534.7 167.2 78.4
Income before income taxes 7.2 61.0 92.7 39.6 17.3
Income tax expense (2.7) (23.0) (36.3) (4.4) (4.5)
Extraordinary item (0.4) (1.0) - - -
Net income $4.1(3) $37.0 $56.5 $35.1 $12.8
---- ----- ----- ----- -----
E.P.S. (diluted) $0.55 $2.48 $0.97 $1.22 $1.11
Balance Sheet
Total assets $416.3 $1,576.0 $1,412.7 $1,235.2 $776.0
Total liabilities 348.8 1,234.0 1,092.5 863.2 675.0
Total shareholders' equity 67.5 342.0 320.2 296.3 101.1
Tangible Equity/Assets 16.2% 21.7% 21.5% 24.0% 13.0%
Debt/Tangible Equity 4.5x 2.5x 2.6x 2.7x 6.1x
LTM ROAA 1.1% 2.4% 4.2% 2.9% 2.1%
LTM ROAE 6.3 10.1 19.3 12.5 13.5
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------
(1) Income statement data includes $38 million in revenue equipment writedowns
and restructuring costs in 1999.
(2) I/B/E/S and Bear Stearns estimates.
(3) Includes $40,000 loss from joint venture and $435,000 expense from
unconsolidated affiliate.
(4) Source: First Call estimates and Factset
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 9
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Other Non-Investment Grade Commercial
Finance Companies
<TABLE>
($ in millions)
- -------------------------------------------------------------------------------------------------------------------------------
Indigo
Transaction
LINC Capital, Inc. DVI, Inc. Microfinancial Inc. Median Indigo Multiples
------------------ --------- ------------------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Data as of: 6/30/99 6/30/99 9/30/99 9/30/99
Price as of 11/4/99 $6.50 $13.88 $10.94 $8.78
Market capitalization 34.2 196.6 178.4 99.0
P/1999E NM 9.8x 7.8x 8.8x 6.9x 10.2x
P/2000E 5.9 8.3 6.4 6.4 6.4 9.5
P/Book Value 0.8 1.0 2.2 1.0 1.0 1.4
P/Tangible Book Value 1.2 1.0 2.2 1.2 1.0 1.4
Income Statement (LTM)
Total revenues $81.3 $133.6 $91.7 $95.7
Interest 14.3 60.9 10.5 37.5
Depreciation 7.1 - 6.7 30.8
Total expenses 76.8 98.7 64.8 78.4
Income before income taxes 4.5 34.9 26.8 17.3
Income tax expense (1.7) (15.4) (11.1) (4.5)
Extraordinary item - 0.1 - -
Net income $2.9 $19.7 $15.7 $12.8
E.P.S. (diluted) $0.54 $1.25 $0.80 $1.11
Balance Sheet
Total assets $405.9 $1,080.8 $260.8 $776.0
Total liabilities 362.5 881.5 178.8 675.0
Total shareholders' equity 43.4 191.6 82.1 101.1
Tangible Equity/Assets 7.3% 17.7% 31.5% 13.0%
Debt/Tangible Equity 11.1x 3.9x 1.6x 6.1x
LTM ROAA 1.0% 2.1% 6.7% 2.1%
LTM ROAE 6.9 10.8 20.2 13.5
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 10
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Discounted Cash Flow Analysis--Methodology
o We looked at two scenarios for our DCF analysis:
o Portfolio Run-Off
o Going Concern
o Portfolio Run-Off
o Assumes no new leases, other than existing commitments, are originated
o Avitas base values are used as estimates of future market values
o Excess cash is dividended out based on an assumed leverage ratio of
7.0x, which management believes is the optimal leverage ratio based on
industry standards and their current debt covenants
o Final payment received in 2017
o Going Concern
o Management provided us with two sets of projections - Base case
projections which assumes cash from existing operations is used to
acquire additional aircraft
- A releverage case which assumes the Company is able to access the
capital markets and releverage its balance sheet. The proceeds are
invested in additional aircraft. Our discussions with Capital
Markets indicate that this scenario would be very unlikely due to
the unfavorable market for small-cap commercial finance companies.
o New aircraft are purchased based on excess cash and leverage
constraints
o Management assumes a constant gain from remarketing of $8.5 million per
year
o Since all excess cash is used to grow the portfolio, no cash is
dividended out during the term of the projections
o Looked at value of company based on a multiple of book and multiple of
earnings in 2002
o Discount Rate
o The Company's true cost of equity is difficult to compute using CAPM.
The R-squared values of the comparative company betas we used were too
low (<.10) to provide an accurate estimate of Indigo's weighted average
cost of capital. We estimated Indigo's cost of capital by assuming a
range of beta values from 0.75-1.25, an equity risk premium of 6.05%
and a small cap premium of 2.60%. This provided a range of discount
rates from 14.7% to 18.7%.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 11
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Discounted Cash Flow: Current Portfolio Run-Off Scenario
<TABLE>
Indigo Aviation Financial Results Summary ($ in thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------------
Income Statement Data: 1999 2000 2001 2002 2003 2004
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $95,384 $97,799 $86,659 $76,819 $71,797 $44,060
Interest income 1,432 830 (0) 49 (0) 4,018
Remarketing income 8,649 (1,638) (2,770) 307 16,187 22,462
-------- -------- -------- -------- -------- --------
Total $105,466 $96,991 $83,888 $77,175 $87,983 $70,540
Expenses:
Depreciation $35,959 $34,868 $30,669 $27,018 $25,335 $15,352
Interest expense 42,954 43,504 37,285 31,587 28,195 17,561
SG&A 6,605 6,074 5,254 4,833 5,510 4,418
-------- -------- -------- -------- -------- --------
Total $85,518 $84,447 $73,208 $63,439 $59,040 $37,330
Pretax income $19,948 $12,544 $10,680 $13,737 $28,944 $33,210
-------- -------- -------- -------- -------- --------
Net income $14,362 $9,032 $7,690 $9,891 $20,839 $23,911
-------- -------- -------- -------- -------- --------
EPS $1.26 $0.79 $0.67 $0.87 $1.82 $2.09
Balance Sheet Data:
Net aircraft $781,309 $671,914 $564,615 $514,141 $366,104 $197,743
Total assets 825,120 697,690 587,099 533,865 447,117 242,670
Total debt 651,760 550,775 461,346 412,460 349,571 168,677
Stockholder's equity 104,565 82,349 65,789 61,165 39,677 18,736
Book value per share $9.15 $7.20 $5.75 $5.35 $3.47 $1.64
Dividends 31,248 24,250 14,514 42,328 44,852
Net Debt/Equity 6.1x 6.1x 6.7x 7.0 6.7x 7.1x
- -------------------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by Indigo management.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 12
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Discounted Cash Flow: Current Portfolio Run-Off Scenario
Equity Value per Share
--------------------------------------------------------------
Discount Rate
---------------------------
14.7% 16.7% 18.7%
---------------------------
95% 9.91 9.32 8.79
Aircraft Residual 97% 10.44 9.82 9.27
Value as a % 100% 11.22 10.57 9.98
of Avitas Base 103% 12.00 11.30 10.68
105% 12.52 11.79 11.14
--------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 13
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Discounted Cash Flow Analysis: Going Concern--Base Case
<TABLE>
Indigo Aviation Financial Results Summary ($ in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------
Income Statement Data: 1999 2000 2001 2002
-------- -------- -------- --------
Revenues:
<S> <C> <C> <C> <C>
Rental Income $94,455 $116,214 $121,724 $126,696
Interest from Finance Leases 1,160 604 432 243
Interest & Other Income 1,472 728 640 643
Remarketing Income (Sales) 8,559 8,500 8,500 8,500
-------- -------- -------- --------
Total Revenue $105,646 $126,045 $131,296 $136,082
Expenses:
SG&A $6,605 $7,288 $8,013 $8,804
Exchange gain/(loss) (35) 0 0 0
Depreciation & Amortization 35,614 43,862 46,339 48,507
Interest Expense 43,673 52,629 51,887 50,284
-------- -------- -------- --------
$85,857 $103,779 $106,239 $107,595
Income Before Taxes $19,719 $22,266 $25,057 $28,487
Income Taxes 5,328 6,235 7,016 7,976
-------- -------- -------- --------
Net Income $14,391 $16,032 $18,041 $20,511
-------- -------- -------- --------
Earnings Per Share $1.25 $1.39 $1.56 $1.77
Balance Sheet Data:
Net Aircraft $837,316 $844,749 $849,534 $851,962
Total assets 878,972 884,863 893,300 899,744
Total debt 707,817 690,969 674,045 651,848
Stockholders' equity 104,427 120,458 138,499 159,010
Book value per share 9.05 10.41 11.97 13.74
Net Debt/Equity 6.8x 5.7x 4.9x 4.1x
- ---------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by Indigo management.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 14
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
DCF Analysis
Equity Value per Share
--------------------------------------------------------------
Discount Rate
---------------------------
14.7% 16.7% 18.7%
---------------------------
0.85x 7.74 7.35 6.98
Multiple on 1.00x 9.11 8.65 8.22
2002 Book 1.15x 10.47 9.94 9.45
Value 1.30x 11.84 11.24 10.68
1.45x 12.75 12.10 11.50
--------------------------------------------------------------
Equity Value per Share
---------------------------------------------------------------
Discount Rate
---------------------------
14.7% 16.7% 18.7%
---------------------------
7.00x 8.22 7.81 7.42
Multiple on 8.00x 9.40 8.92 8.48
2002 Earnings 9.00x 10.57 10.04 9.54
10.00x 11.75 11.15 10.60
---------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 15
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Discounted Cash Flow Analysis: Going Concern--Releverage Case
<TABLE>
Indigo Aviation Financial Results Summary ($ in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------
Income Statement Data: 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $94,455 $127,134 $150,284 $180,456
Interest from Finance Leases 1,160 604 432 243
Interest & Other Income 1,472 728 640 643
Remarketing Income (Sales) 8,559 8,500 8,500 8,500
-------- -------- -------- --------
Total Revenue $105,646 $136,966 $159,856 $189,842
Expenses:
SG&A $6,605 $7,399 $8,302 $9,348
Exchange gain/(loss) (35) 0 0 0
Depreciation & Amortization 35,614 47,887 56,865 68,320
Interest Expense 43,673 58,992 68,117 80,160
-------- -------- -------- --------
$85,927 $114,278 $133,284 $157,828
Income Before Taxes $19,719 $22,688 $26,572 $32,014
Income Taxes 5,328 6,353 7,440 8,963
-------- -------- -------- --------
Net Income $14,391 $16,336 $19,132 $23,050
-------- -------- -------- --------
Earnings Per Share $1.25 $1.41 $1.65 $1.99
Balance Sheet Data:
Net aircraft $837,316 $972,975 $1,125,934 $1,320,148
Total assets 878,972 1,021,063 1,185,878 1,394,938
Total debt 707,817 818,661 948,107 1,113,626
Stockholders' equity 104,427 120,763 139,295 162,344
Book value per share 9.05 10.44 12.04 14.03
Net Debt/Equity 6.8x 6.8x 6.8x 6.9x
- ---------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by Indigo management.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 16
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
DCF Analysis
Equity Value per Share
--------------------------------------------------------------
Discount Rate
---------------------------
14.7% 16.7% 18.7%
---------------------------
0.85x 7.90 7.50 7.13
Multiple on 1.00x 9.30 8.83 8.39
2002 Book 1.15x 10.69 10.15 9.65
Value 1.30x 12.09 11.47 10.90
1.45x 13.48 12.80 12.16
--------------------------------------------------------------
Equity Value per Share
--------------------------------------------------------------
Discount Rate
---------------------------
14.7% 16.7% 18.7%
---------------------------
7.00x 9.24 8.77 8.34
Multiple on 8.00x 10.56 10.03 9.53
2002 Earnings 9.00x 11.88 11.28 10.72
10.00x 13.20 12.53 11.91
--------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 17
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Net Asset Value Analysis
Using current Avitas base values, we adjusted the book value of the Company's
aircraft to estimated current market value. Due to the leveraged nature of the
Company's balance sheet, small changes in the value of the Company's aircraft
can have a large effect on the adjusted book value per share.
<TABLE>
Indigo Aviation AB ($ in millions)
- ----------------------------------------------------------------------------------------------------------------------------
2000 Avitas Values 1999 Avitas Values
------------------------- -------------------------
Q3 99 Adjustments Adjusted Adjustments Adjusted
------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Cash $18.7 $1.0 $19.7 $1.0 $19.7
Net Aircraft 725.2 (3.9) 721.4 42.5 767.8
Other Assets 32.1 (4.2) 28.0 (4.2) 28.0
----- ----- -----
Total 776.0 (7.0) 769.0 39.4 815.4
Debt 613.0 - 613.0 - 613.0
Other Liabilities 50.1 (4.7) 45.4 (4.7) 45.4
Deferred Taxes 11.9 (0.9) 10.9 12.1 23.9
----- ----- -----
675.0 (5.6) 669.3 7.4 682.3
Stockholders' Equity 101.1 (1.4) 99.7 32.0 133.1
----- ----- -----
Total 776.0 (7.0) 769.0 39.4 815.4
----- ----- -----
Net Book Value per Share at 100% of Avitas Base $8.96 $8.73 $11.66
Net Book Value per Share at 95% of Avitas Base 6.46 9.24
Net Book Value per Share at 105% of Avitas Base 11.01 14.08
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 18
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Key Issues as a Going Concern
In addition to our quantitative analysis, we identified certain issues facing
Indigo as a going concern
o Access to Capital. The Company has historically financed its balance sheet
with a mix of secured debt and equity capital. As a small cap finance
company, Indigo Aviation's ability to access the public markets for
additional equity or unsecured debt is limited. If the Company in unable to
secure financing at attractive rates, its ability to grow its portfolio of
aircraft and earnings will be significantly diminished.
o Credit Risks. As demonstrated on the following page, the Company has been
able to avoid any major credit problems, although it has been forced to
take back aircraft from time to time from certain operators. The aircraft
industry tends to be cyclical in nature. Any downturn could have a
significant impact on the company's business.
o Residual Risk. A significant portion of the Company's value lies in the
residual values of the aircraft. The ability to accurately project these
values is difficult and uncertain. A decrease in demand for narrowbody
aircraft could reduce the company's true book value by tens of millions of
dollars.
o Limited Float. The company's public float is approximately 3.0 million
shares or approximately $27 million.(1)
- ------------
(1) As of November 4, 1999
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 19
<PAGE>
------------------
Section 3
Share Exchange Analysis
CONFIDENTIAL DRAFT
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Has/Gets Analysis--Indigo Shareholders
5.891 million shares of Indigo currently held by private shareholders will be
exchanged for 21.799 million shares of AerFi. The following table summarizes the
economic impact on Indigo's private shareholders.
<TABLE>
- ----------------------------------------------------------------------------------------
Has Gets % Change
---------------------------------------------------
<S> <C> <C> <C>
2001 FY EPS $1.43(1) $1.38 (3.5$)
2002 FY EPS 1.59(1) 1.56 (1.9)
Book Value Per Share 9.02 5.33 (40.9)
Tangible Book Value Per Share 9.02 4.76 (47.2)
NAV Per Share(2) 11.66 $9.51(3) / 8.73(4) (18.4) / (25.2)
- ----------------------------------------------------------------------------------------
- ------------
(1) Base case assumptions.
(2) Using 1999 Avitas values.
(3) Their assumptions.
(4) Our assumptions.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 20
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi--Background
o Founded in 1975 as GPA Group plc
o Pioneered aircraft operating leasing with ILFC
o Restructured in 1993, after a failed IPO
o GE Capital option to acquire 100% control
o GECAS management of aircraft (with ex-GPA people)
o Short term liability structure necessitated further restructuring
o Refinanced debt in 1996
o Airplanes Group $4.6B securitization (previous ALPS deals)
o Recapitalized in November 1998
o Texas Pacific became major shareholder
o GE Capital Option reduced to a passive 22.8%
o Independent future strategy
o Aircraft management currently outsourced to GECAS/Babcock & Brown
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 21
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi Group plc--Overview
o AerFi
o 35 Aircraft (of which 14 are leased-in)
o Cash Balance of $536M as of September 30, 1999
o No Net Leverage
o Owns 50% of GPA-ATR Joint Venture--Nil Value
o Owns 100% of "Equity" (D&E Notes) in AerCo - $10M NBV/$192 Face
o Aircraft Managed by GECAS
o AerCo Securitization Vehicle
o 33 Aircraft
o Financed with $752M long term debt (excl. D&E notes)
o Open ended securitization vehicle
o Aircraft managed by Babcock & Brown
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 22
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerCo--Description
o Launched in July 1998, to refinance 26 ALPS 94-1 and 9 AerFi aircraft
o $952M Appraised Value of Aircraft
o Investment Grade Notes $800M
o D Notes $80M
o E Notes $112M
o Flexible long term capital structure
o Class D and E Notes (with residual) retained by AerFi
o D Note ($80M) Coupon: 8.5% Fixed
o E Notes ($112M) Coupon: 15.0% (Subject to adequacy of Cash Flows)
o Babcock & Brown is aircraft servicer
o Master Trust--open-ended vehicle which can purchase additional aircraft
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 23
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi--Management
o Total headcount 30
o CEO Patrick Blaney, 45, joined AerFi in 1986 from KPMG, appointed in 1993
to manage GPA's restructuring after senior positions in airline marketing
and asset sales
o CFO Edward Hansom, 40, joined AerFi 1988 from Schroders, appointed in 1997
after senior positions in asset sales and treasury
o 5 other senior management, average age 39, average AerFi experience 10
years
o 7 junior management, average age 30, average AerFi experience 7 years
o Management team and directors own 14.6% equity stake
o In process of adding marketing and technical expertise
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 24
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi--Organization
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
Function Current Status Future Plans
- -------------------------- ------------------------------------------------ ---------------------------------------------------
<S> <C> <C>
Finance In-house No change
Treasury In-house No change
Risk Management In-house No change
Legal In-house No change
Systems Partly Outsourced to GECAS/Partly In-house Transitioning to In-house by Dec. 1999
Airline Marketing Partly Outsourced to GECAS and Babcock & Brown Transitioning to In-house by (at latest) Oct. 2001
Technical Partly Outsourced to GECAS and Babcock & Brown Transitioning to In-house by (at latest) Oct. 2001
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 25
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi Projected Balance Sheet
<TABLE>
($ in thousands)
------------------------------------------------------------------------------------------------------------
Year Ended March 31,
-----------------------------------------------------------
1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash $388,038 $456,640 $431,276 $459,179
Restricted Cash 113,261 105,620 91,465 61,352
Net Aircraft 1,056,493 880,281 835,020 788,994
Other Assets 142,391 142,761 124,180 67,796
---------- ---------- ---------- ----------
Total Assets $1,700,183 $1,585,301 $1,481,941 $1,377,321
Original Debt $1,006,115 $928,689 $820,708 $685,443
New Additional Debt - - - -
---------- ---------- ---------- ----------
Total Debt $1,006,115 $928,689 $820,708 $685,443
Other Liabilities 354,373 269,706 231,782 216,162
Deferred Taxes 10,557 10,554 10,554 10,554
---------- ---------- ---------- ----------
Total Liabilities $1,371,045 $1,208,948 $1,063,044 $912,159
Preferred Equity $116,615 $108,307 $100,000 $100,000
Equity $212,523 $268,046 $318,896 $365,162
---------- ---------- ---------- ----------
Total Liabilities and Equity $1,700,183 $1,585,301 $1,481,941 $1,377,321
---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 26
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi Projected Income Statements
<TABLE>
($ in thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
------- ------- ------- ------- ------------------------------------
Jun99 Sep99 Dec99 Mar00 2000 2001 2002
------- ------- ------- ------- -------- -------- --------
Revenue:
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Income $49,712 $44,570 $36,191 $44,956 $175,429 $168,637 $167,359
Leasein (14,198) (12,781) (11,671) (11,762) (50,412 (47,048 (47,048)
Interest & Other 10,931 8,130 9,058 9,244 37,362 36,489 33,235
Remarketing and Other 1,961 (1,358) 23,781) (71) 24,312 (6,270) (6,423)
------- ------- ------- ------- -------- ------- -------
Total Revenue $48,406 $38,560 $57,359 $42,367 $186,692 $151,808 $147,123
------- ------- ------- ------- -------- ------- -------
SG&A (3,774) (3,794) (4,863) (3,740) (16,171 (14,319) (16,483)
------- ------- ------- ------- -------- ------- -------
Operating Income $44,632 $34,766 $52,495 $38,627 $170,521 $137,489 $130,639
Depreciation & Amortization (13,230) (12,239) (12,253) (12,244) (49,966) (46,611 (47,726)
------- ------- ------- ------- -------- ------- -------
$31,402 $22,528 $40,242 $26,383 $120,555 $90,878 $82,913
------- ------- ------- ------- -------- ------- -------
Interest Expense--Preferred (337) (341) (341) (337) (1,356) (694 0
Interest Expense--Debt (12,995) (10,209) (10,208) (11,228) (44,640) (39,334 (36,647)
------- ------- ------- ------- -------- ------- -------
Income Before Taxes $18,070 $11,978 $29,693 $14,818 $74,559 $50,850 $46,266
------- ------- ------- ------- -------- ------- -------
Income Taxes 0 0 0 0 0 0 0
Income Tax Rate 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Net Income $18,070 $11,978 $29,693 $14,818 $74,559 $50,850 $46,266
------- ------- ------- ------- -------- ------- -------
Other $195 $183 $92 $0 $470 $0 $0
------- ------- ------- ------- -------- ------- -------
Net Income to Common $18,265 $12,161 $29,785 $14,818 $75,029 $50,850 $46,266
Extraordinary Items: ($1,500) ($16,708) - - ($18,208) - -
Net Income before Unusual Items $16,765) ($4,547) $29,785 $14,818 $56,821 $50,850 $46,266
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 27
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Pro Forma Combined Adjusted Balance Sheet
<TABLE>
($ in thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended March 31,
--------------------------------
AerFi IAAB NAV adj* Purchase Adj Dec-99 2000 2001 2002
--------- -------- -------- ------------ -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash $403,396 $8,255 $0 ($148,500) $263,151 $269,467 $117,516 $8,679
Restricted Cash 116,445 - - - 116,445 105,620 91,465 61,352
Net Aircraft 959,573 837,316 25,000 1,821,888 1,918,357 2,492,281 3,033,385
Goodwill - - - 29,565 29,565 29,195 27,717 26,239
Other Assets 142,443 33,402 (4,100) 171,745 179,863 188,753 158,619
--------- ------- ------ -------- --------- --------- --------- ---------
Total Assets 1,621,856 878,972 20,900 (118,935) 2,402,793 2,502,502 2,917,731 3,288,274
Original Debt 940,081 707,817 1,647,898 1,637,754 1,517,020 1,364,070
New Additional Debt - - - - 125,821 600,094 1,025,463
Preferred Equity 116,615 - - - 116,615 108,307 100,000 100,000
--------- ------- ------ -------- --------- --------- --------- ---------
Total Debt 1,056,696 707,817 - - 1,764,513 1,763,575 2,117,114 2,389,533
Other Liabilities 301,379 53,234 - - 354,613 333,946 335,388 357,096
Deferred Taxes 10,554 13,494 - - 24,048 25,513 31,959 39,149
--------- ------- ------ -------- --------- --------- --------- ---------
Total Liabilities 1,368,628 774,545 - - 2,143,174 2,123,034 2,484,462 2,785,778
Equity 253,228 104,427 20,900 (118,935) 259,620 271,162 333,269 402,496
--------- ------- ------ -------- --------- --------- --------- ---------
Total Liabilities and Equity 1,621,856 878,972 20,900 (118,935) 2,402,793 2,502,502 2,917,731 3,288,274
--------- ------- ------ -------- --------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
(1) Assumes AerFi capitalizes approximately 50% of premium as an adjustment to
aircraft.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 28
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Pro Forma Combined Income Statement
($ in thousands)
- -------------------------------------------------------------------------------
Year Ended March 31,
-----------------------
2001 2002
-------- --------
Revenue:
Rental Income $347,692 $431,538
Lease-in (47,048) (47,048)
Interest & Other 22,354 11,413
Remarketing and Other 10,107 11,734
-------- --------
Total Revenue 333,104 407,636
SG&A (20,763) (25,385)
-------- --------
Operating Income 312,341 382,252
Exchange gain/(loss) - -
-------- --------
312,341 382,252
Goodwill Amortization (1,478) (1,478)
Depreciation (114,869) (147,864)
-------- --------
Total Deprec & Amortiz (116,347) (149,343)
-------- --------
195,994 232,909
Interest Expense - Preferred (694) -
Interest Expense - Debt (118,869) (146,836)
-------- --------
Income Before Taxes 76,431 86,073
Income Taxes (6,446) (7,190)
-------- --------
Net Income 69,985 78,883
-------- --------
Other - -
Income from Continuing Operations 69,985 78,883
-------- --------
Extraordinary Items:
One-time sales revenue $0 $0
Insurance reclaim - -
IT investment - -
Canadian reversal - -
General provision reversal - -
Adjustment for Not Categorized - -
AerFi Extraordinary Items $0 $0
-------- --------
Costs associated with breaking servicing - -
contract
Transaction expenses (IAAB) - -
-------- --------
$0 $0
Net Income before Unusual Items $69,985 $78,883
EPS 0.37 0.42
Pro Forma Combined:
Remarketing Income as a % of Rental Revenue 2.9% 2.7%
Remarketing Income as a % of Pre-Tax 13.2% 13.6%
Indigo Stand-Alone:
Remarketing Income as a % of Rental Revenue 7.2% 6.9%
Remarketing Income as a % of Pre-Tax 36.9% 33.1%
- -------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 29
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Pro Forma Combined Adjusted Income Statement
($ in thousands)
- --------------------------------------------------------------------------------
Year Ended March 31,
-----------------------
2001 2002
-------- --------
AerFi Income (before unusual charges) $50,850 $46,266
Indigo Income (before unusual charges) 16,577 18,489
------- --------
Total 67,427 64,755
Adjustments Relating to Acquisition of New Aircraft:
Rental Income from Each New Aircraft 1.06% $60,560 $141,306
New Depreciation (22,284) (51,997)
New Interest Expense 7.0 (26,993) (58,835)
Foregone Interest Income 5.9 (5,599) (13,064)
Additional Employee Expense 900 per year (1,125) (2,025)
DIC Expenses $9 (612) (1,428)
------- --------
Total Pre-Tax Adjustments 3,947 13,957
Taxes on Adjustments 0.0% - -
------- --------
Net Adjustment Income 3,947 13,957
Net Income After New Aircraft Adjustments 71,374 78,712
Reduction in Interest Income from Transaction (9,199) (9,418)
------- --------
Income after Reduction in Interest Income 62,175 69,294
Synergies 2,800 2,800
------- --------
Income after Synergies 64,975 72,094
Purchase Accounting Adjustments
Goodwill Amortization 20 years (1,478) (1,478)
Increased Depreciation with Regards to Increase in NAV (1,389) (1,389)
------- --------
Income from Continuing Operations 62,108 69,227
Costs associated with breaking servicing contract - -
Transaction expenses (IAAB) - -
AerFi Extraordinary Items - -
------- --------
Income after Extraordinary Items 62,108 69,227
Increase in Remarketing 7,877 9,657
------- --------
Income after Increase in Remarketing 69,985 78,883
- --------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 30
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Combined Adjusted Income Statement (cont.)
($ in thousands)
- ------------------------------------------------------------------------------
Year Ended March 31,
------------------------
2001 2002
-------- --------
AerFi
EPS before Purchase Adjustments $0.35 $0.38
EPS from Continuing Operations 0.33 0.37
EPS after Extraordinary Items 0.33 0.37
EPS after Increase in Remarketing 0.37 0.42
Shares 188,099 188,099
Blue Shareholders:
EPS before Purchase Adjustments $1.28 $1.42
EPS from Continuing Operations 1.22 1.36
EPS after Extraordinary Items 1.22 1.36
EPS after Increase in Remarketing 1.38 1.55
Stand-Alone Blue:
Net income $16,577 $18,489
EPS 1.43 1.60
Accretion/(Dilution)
EPS before Purchase Adjustments (10.8%) (11.2%)
EPS from Continuing Operations (14.7) (14.8)
EPS after Extraordinary Items (14.7) (14.8)
EPS after Increase in Remarketing (3.9) (2.9)
- ------------------------------------------------------------------------------
- ------------
Source: Provided by AerFi management.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 31
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Pro Forma NAV Per Share Analysis
<TABLE>
($ in millions)
- ---------------------------------------------------------------------------------------------------
Their Assumptions Our Assumptions for
for AerFi AerFi
----------------- -------------------
<S> <C> <C> <C> <C>
AerFi NAV $428.0 $388.0
Indigo NAV 133.1 133.1
------ ------
Combined 561.1 521.1
Transaction Adjustments (77.5) (77.5)
------ ------
$483.6 $443.6
Stand-Alone:
AerFi current NAV per share $2.57 $2.33
Indigo current NAV per share 11.66 11.66
Pro Forma Combined: % Change % Change
-------- --------
AerFi NAV per Share $2.57 (0.1%) $2.36 (1.1%)
Indigo NAV per Share 9.51 (18.4) 8.73 (25.2)
- ---------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 32
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
AerFi Group PLC
<TABLE>
Net Asset Value Analysis ($ in millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Our Ours Their Theirs
9/30/99 Adjustments Adjusted Adjustments Adjusted Comments
------- ----------- -------- ----------- -------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash $340 $(61) $279 $(61) $279 Represents special cash dividend net of proceeds
from options
Restricted Cash 196 (19) 177 (19) 177 Adjustment required to reflect the long term
nature of certain security deposits
Net Aircraft 960 66 1,026 69 1,029 Represents base appraised values per AVITAS Blue
Book as of January 1999
Spares and Engines 15 28 43 28 43 Economic value of engines = $28 million, spares
=$10 million and insurance =$5 million
GECC MASA 36 (20) 16 (7) 29 NPV of GECC option to purchase $36 million in
Oct. '01
Other Assets 104 1 105 1 105 (1) AerCo deferred financing charges; (2)
----- ---- ----- ---- ----- Receivables from Markair / Southern Cross
settlements
Total 1,651 (5) 1,646 11 1,662
Debt 954 - 954 - 954
Creditors and Accruals 70 - 70 (24) 46 Adjustments reflect excess provisions in balance
sheet (GAAP provision is in addition to the market
value of the liabilities
Lease-In Provision 144 (85) 59 (85) 59 Adjustment represents a reduction in the
accounting provision
Security Deposits 30 - 30 - 30
Maintenance Reserve 94 (30) 64 (30) 64 Adjustment required to reflect the timing and
amount of net cash flow of future maintenance
payments
Deferred Taxes 11 (10) 1 (10) 1 Withholding tax provision held for accounting
----- ---- ----- ---- ----- purposes only
1,303 (125) 1,178 (149) 1,154
Preferred Stock 117 (37) 80 (37) 80 Assumes restructuring by repurchasing the
outstanding first / second preference shares
Stockholder's Equity 231 157 388 197 428
----- ---- ----- ---- -----
Total 1,651 (5) 1,646 11 1,662
----- ---- ----- ---- -----
Net Asset Value
per Share $1.76 $2.33 $2.57
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 33
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Portfolio Composition: AerFi Group PLC(1)
Aircraft Type by Units
- ----------------------------------------
Chart here...
Aircraft Type by Avitas Value
- ----------------------------------------
Chart here...
By Lessee
- ------------------------------------------------------------------------
Lessee % Avitas Value %
- ---------------------- ---- ---------------------- ----
Aer Lingus 1.9% Aer Lingus 2.1%
Air 2000 1.9 Air 2000 3.8
Air Alliance 3.7 Air Alliance 1.1
Air Europe 1.9 Air Europe 2.4
Air Inter 3.7 Air Inter 5.1
Air Pacific 1.9 Air Pacific 1.8
Aircraft Int. Leasing 1.9 Aircraft Int. Leasing 1.3
Airtours 3.7 Airtours 5.4
AOG 1.9 AOG 1.1
Asiana 3.7 Asiana 4.8
Avianca 1.9 Avianca 3.5
BAX 1.9 BAX 1.3
British Midland 3.7 British Midland 3.9
Canadian 1.9 Canadian 2.9
China Xianj iang 1.9 China Xianj iang 3.5
Eurofly S.p.A. 3.7 Eurofly S.p.A. 3.4
FEAT 1.9 FEAT 1.8
Idefix 3.7 Idefix 1.8
Indian Airlines 1.9 Indian Airlines 0.9
Lan Chile 3.7 Lan Chile 5.8
Malev 1.9 Malev 2.0
Monarch 1.9 Monarch 2.9
PAL 3.7 PAL 3.6
Pegasus 1.9 Pegasus 1.9
Schreiner Airways 3.7 Schreiner Airways 1.2
Spanair 5.6 Spanair 8.5
Sun Express 1.9 Sun Express 2.0
Tam 13.0 Tam 8.5
THY 3.7 THY 4.7
Tower Air 1.9 Tower Air 2.2
Ukraine International 1.9 Ukraine International 0.7
US Air Express 1.9 US Air Express 0.5
Xiamen 3.7 Xiamen 1.5
Yunnan 1.8 Yunnan 2.1
- ------------------------------------------------------------------------
- ------------
(1) Excludes leased-in portfolio.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 34
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Portfolio Composition: Indigo Aviation AB
Aircraft Type by Unit
- -----------------------------
Chart here...
Aircraft Type by Avitas Value
- -----------------------------
Chart here...
By Lessee
- ------------------------------------------------------------------------
Lessee % Avitas Value %
- ---------------------- ---- ---------------------- ----
ANZ 13.2% ANZ 9.3%
ASIANA 2.6 ASIANA 3.1
AVIATECA 2.6 AVIATECA 0.4
BLUE PANORAMA 5.3 BLUE PANORAMA 7.0
BRAATHENS 5.3 BRAATHENS 4.9
BRITISH MIDLAND 2.6 BRITISH MIDLAND 5.4
CALEDONIAN 5.3 CALEDONIAN 7.1
CHINA NORTHWEST 2.6 CHINA NORTHWEST 5.2
CHINA SOUTHERN 2.6 CHINA SOUTHERN 3.3
DELTA 2.6 DELTA 2.0
EAT/AIR GABON 2.6 EAT/AIR GABON 0.6
FINNAIR 7.9 FINNAIR 7.0
FRONTIER 10.5 FRONTIER 8.2
ISTANBUL 2.6 ISTANBUL 3.6
LACSA 2.6 LACSA 0.5
L'AEROPOSTALE 2.6 L'AEROPOSTALE 2.8
MAERSK/DBA 2.6 MAERSK/DBA 3.4
RENO AIR 5.3 RENO AIR 4.8
SPANAIR 2.6 SPANAIR 2.0
TUNINTER 2.6 TUNINTER 0.9
TWA 2.6 TWA 6.6
VIRGIN EXPRESS 5.3 VIRGIN EXPRESS 6.5
XIAMEN 5.3 XIAMEN 5.5
- ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 35
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Portfolio Composition: Pro Forma(1)
Aircraft Type by Unit
- -----------------------------
Insert chart here...
Aircraft Type by Avitas Value
- -----------------------------
Insert chart here...
- -----------
(1) Excludes AerFi's leased-in portfolio.
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 36
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Portfolio Composition: Pro Forma(1)
<TABLE>
Lessee by Unit Lessee by Avitas Value
- ---------------------------------------------------------------- -----------------------------------------------------------------
Lessee % Lessee % Lessee % Lessee %
- ----------------------- --- ----------------------- --- ----------------------- --- ----------------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Aer Lingus 1.1% FRONTIER 4.3% Aer Lingus 1.2% FRONTIER 3.7%
Air 2000 1.1 Idefix 2.2 Air 2000 2.2 Idefix 1.0
Air Alliance 2.2 Indian Airlines 1.1 Air Alliance 0.6 Indian Airlines 0.5
Air Europe 1.1 ISTANBUL 1.1 Air Europe 1.4 ISTANBUL 1.6
Air Inter 2.2 LACSA 1.1 Air Inter 2.9 LACSA 0.2
Air Pacific 1.1 L'AEROPOSTALE 1.1 Air Pacific 1.0 L'AEROPOSTALE 1.3
Aircraft Int. Leasing 1.1 Lan Chile 2.2 Aircraft Int. Leasing 0.8 Lan Chile 3.4
Airtours 2.2 MAERSK/DBA 1.1 Airtours 3.1 MAERSK/DBA 1.5
ANZ 5.4 Malev 1.1 ANZ 1.8 Malev 1.1
AOG 1.1 Monarch 1.1 AOG 0.7 Monarch 1.7
ASIANA 3.3 PAL 2.2 ASIANA 4.2 PAL 2.1
Avianca 1.1 Pegasus 1.1 Avianca 2.0 Pegasus 1.1
AVIATECA 1.1 RENO AIR 2.2 AVIATECA 0.2 RENO AIR 2.1
BAX 1.1 Schreiner Airways 2.2 BAX 0.8 Schreiner Airways 0.7
BLUE PANORAMA 2.2 Spanair 4.3 BLUE PANORAMA 3.1 Spanair 5.8
BRAATHENS 2.2 Sun Express 1.1 BRAATHENS 2.2 Sun Express 1.1
BRITISH MIDLAND 3.3 Tam 7.6 BRITISH MIDLAND 4.7 Tam 4.9
CALEDONIAN 2.2 THY 2.2 CALEDONIAN 3.2 THY 2.7
Canadian 1.1 Tower Air 1.1 Canadian 1.7 Tower Air 1.2
CHINA NORTHWEST 1.1 TUNINTER 1.1 CHINA NORTHWEST 2.3 TUNINTER 0.4
CHINA SOUTHERN 1.1 TWA 1.1 CHINA SOUTHERN 1.5 TWA 2.9
China Xianj iang 1.1 Ukraine International 1.1 China Xianj iang 2.0 Ukraine International 0.4
DELTA 1.1 US Air Express 1.1 DELTA 0.9 US Air Express 0.3
EAT/AIR GABON 1.1 VIRGIN EXPRESS 2.2 EAT/AIR GABON 0.3 VIRGIN EXPRESS 2.9
Eurofly S.p.A. 2.2 Xiamen 4.3 Eurofly S.p.A. 2.0 Xiamen 3.3
FEAT 1.1 Yunnan 1.1 FEAT 1.0 Yunnan 1.2
FINNAIR 3.3 FINNAIR 3.1
- ---------------------------------------------------------------- -----------------------------------------------------------------
- ------------
(1) Excludes AerFi's leased-in portfolio.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 37
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Aircraft Lessors
<TABLE>
($ in millions)
- ------------------------------------------------------------------------------------------------------------
International
Aircraft Stand-Alone AerFi
Investors Indigo AerFi(1) Values Pro Forma Values
------------- -------- --------------- ----------------
<S> <C> <C> <C> <C>
Data as of: 9/30/99 9/30/99
Price as of 11/4/99 $7.00 $8.78
Market capitalization 29.5 99.0
P/1999E 7.9x 6.9x NA NA
P/2000E 6.8 6.4 $0.45(4) $0.35(4)
P/Book Value 0.8 1.0 1.61 1.45
P/Tangible Book 0.8 1.0 1.61 1.28
P/MRQA before remarketing income(2) 7.3 12.3 NA NA
Income Statement (LTM)
Total revenues $37.6 $95.7 $186.7
Interest 15.3 37.5 46.0
Depreciation 13.8 30.8 50.0
Total expenses 31.2 78.4 112.1
Income before income taxes 6.4 17.3 74.6
Income tax expense (2.1) (4.5) -
---- ----- -----
Net income $4.1(3) $12.8 $74.6
E.P.S. (diluted) $0.94 $1.11 $0.45
Balance Sheet
Total assets $319.9 $776.0 $1,700.2
Total liabilities 282.3 675.0 1,371.0
Total shareholders' equity 37.6 101.1 212.5
Tangible Equity/Assets 11.7% 13.0% 12.5%
Debt/Tangible Equity 6.7x 6.1x 4.7x
LTM ROAA 1.5% 2.1% NA
LTM ROAE 11.3 13.5 NA
- ------------------------------------------------------------------------------------------------------------
- ------------
(1) Projected FY2000 income statement data; balance sheet data as of 9/30/99.
(2) Most recent quarter's net income annualized.
(3) Income statement data includes cumulative effect of an accounting change of
$209,000 in 1998 and $214,263 extraordinary loss in 1999.
(4) Before extraordinary items.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 38
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Transportation Related Commercial
Finance Companies
<TABLE>
($ in millions)
- ------------------------------------------------------------------------------------------------------------------------------------
AerFi
Willis Lease Rollins Truck Stand-Alone Pro Forma
Finance Corp. XTRA Corp. Leasing Corp. Interpool, Inc. Median AerFi(2) Values Values
------------- ---------- ------------- --------------- ------ --------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Data as of: $9/30/99 $6/30/99 $9/30/99 $6/30/99
Price as of 11/4/99 $7.31 42.19 10.31 8.25
Market capitalization 54.1 559.8 591.6 227.5
P/1999E (6) NM 10.0x(1) 10.3x 7.3x 10.0 NA NA
P/2000E(6) 4.6 6.8(1) 9.0 6.5 6.7 $0.4(5) 0.35(5)
P/Book Value 0.8 1.6 1.8 0.8 1.2 1.61 1.45
P/Tangible Book 0.8 1.6 1.9 0.8 1.2 1.61 1.28
Income Statement (LTM)
Total revenues $98.4 $462.0 $627.4 $206.8 $186.7
Interest 21.5 57.0 55.4 65.7 46.0
Depreciation 12.6 152.0 192.1 48.1 50.0
Total expenses 91.2 401.0(3) 534.7 167.2 112.1
Income before income taxes 7.2 61.0 92.7 39.6 74.6
Income tax expense (2.7) (23.0) (36.3) (4.4) -
------ -------- -------- -------- --------
Net income $4.1(4) $37.0 $56.5 $35.1 $74.6
E.P.S. (diluted) $0.55 $2.48 $0.97 $1.22 $0.45
Balance Sheet
Total assets $416.3 $1,576.0 $1,412.7 $1,235.2 $1,700.2
Total liabilities 348.8 1,234.0 1,092.5 863.2 1,371.0
Total shareholders' equity 67.5 342.0 320.2 296.3 212.5
Tangible Equity/Assets 16.2% 21.7% 21.5% 24.0% 12.5%
Debt/Tangible Equity 4.5x 2.5x 2.6x 2.7x 4.7x
LTM ROAA 1.1% 2.4% 4.2% 2.9% NA
LTM ROAE 6.3 10.1 19.3 12.5 NA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------
(1) I/B/E/S and Bear Stearns estimates.
(2) Projected FY2000 income statement data; balance sheet data as of 9/30/99.
(3) Income statement data includes $38 million in revenue equipment writedowns
and restructuring costs in 1999.
(4) Includes $40,000 loss from joint venture and $435,000 expense from
unconsolidated affiliate.
(5) Before extraordinary items.
(6) Source: First Call estimates and Factset
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 39
<PAGE>
Indigo Aviation AB
- --------------------------------------------------------------------------------
Public Comparables--Other Non-Investment Grade Commercial
Finance Companies
<TABLE>
($ in millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Stand-Along AerFi
LINC Capital, Inc. DVI, Inc. Microfinancial Inc. Median AerFi(1) Values Pro Forma Values
------------------ --------- ------------------- ------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Data as of: 6/30/99 6/30/99 9/30/99
Price as of 11/4/99 $6.50 $13.88 $10.94
Market capitalization 34.2 196.6 178.4
P/1999E NM 9.8x 7.8x 8.8x NA NA
P/2000E 5.9 8.3 6.4 6.4 $0.45(2) $0.35(2)
P/Book Value 0.8 1.0 2.2 1.0 1.61 1.45
P/Tangible Book Value 1.2 1.0 2.2 1.2 1.61 1.28
Income Statement (LTM)
Total revenues $81.3 $133.6 $91.7 $186.7
Interest 14.3 60.9 10.5 46.0
Depreciation 7.1 - 6.7 50.0
Total expenses 76.8 98.7 64.8 112.1
Income before income taxes 4.5 34.9 26.8 74.6
Income tax expense (1.7) (15.4) (11.1) -
------ -------- ------ --------
Net income $2.9 $19.7 $15.7 $74.6
E.P.S. (diluted) $0.54 $1.25 $0.80 $0.45
Balance Sheet
Total assets $405.9 $1,080.8 $260.8 $1,700.2
Total liabilities 362.5 881.5 178.8 1,371.0
Total shareholders' equity 43.4 191.6 82.1 212.5
Tangible Equity/Assets 7.3% 17.7% 31.5% 12.5%
Debt/Tangible Equity 11.1x 3.9x 1.6x 4.7x
LTM ROAA 1.0% 2.1% 6.7% NA
LTM ROAE 6.9 10.8 20.2 NA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------
(1) Projected FY2000 income statement data; balance sheet data as of 9/30/99.
(2) Before extraordinary items.
</TABLE>
- --------------------------------------------------------------------------------
CONFIDENTIAL DRAFT 40
Exhibit (e)(1)
The Swedish Companies Act (SFS 1975:1385)
Redemption of Shares in subsidiaries
Chapter 14, Section 31
Where the parent company, alone or together with its subsidiaries, owns more
than nine-tenths of the shares with more than nine-tenths of the votes for all
of the shares in a subsidiary, the parent company shall have the right to redeem
the remaining shares from the other shareholders in the subsidiary. Any person
whose shares may be redeemed shall have the right to have his shares redeemed by
the parent company.
Any dispute in respect of whether rights or obligations exist regarding
redemption or in respect of the redemption sum shall be determined by an
arbitration panel consisting of three arbitrators. Unless otherwise prescribed
in this chapter, the provisions set forth in the Arbitration Act (SFS 1929:145)
shall apply to matters in respect of arbitrators and proceedings before such
arbitrators. However, the provisions set forth in section 18, second paragraph
of the above-stated Act regarding the period of time within which an arbitration
award shall be presented shall not apply. The costs of the arbitration
proceedings shall be borne by the parent company, provided the arbitrators do
not impose all or portion of such costs, based upon special cause, on another
shareholder. Any person who is not satisfied with the arbitration award shall
have the right to file proceedings in a court of law within sixty days from the
date on which he received the arbitration award or a certified copy of such. The
court of competent jurisdiction shall be the district court in the location in
which the company has its registered office.
Where the parent company has acquired the greater portion of its shares in the
subsidiary as a consequence of an offer directed to an extended group of persons
to transfer such shares to the parent company in exchange for specified
consideration, the redemption sum shall be equivalent to such consideration,
unless special cause otherwise exists. (SFS 1984:342).
Chapter 14, Section 32
Where the parent company wishes to redeem shares in a subsidiary pursuant to
section 31 and where agreement in respect thereof cannot be reached, the parent
company shall submit a written demand to the board of directors of the
subsidiary that the dispute be referred to arbitration and stating the parent
company's arbitrator.
The board of directors of the subsidiary shall, following a demand pursuant to
paragraph one, publish without delay a request in Post-och Inrikestidningar and
<PAGE>
the local newspaper(s) designated by the board of directors, that shareholders
to whom redemption claim was directed shall, not more than two weeks from the
date of publication, present the subsidiary with their written selection of an
arbitrator. Such request shall also be sent by post to each shareholder,
provided his postal address is known to the company.
In the event that not all of the shareholders registered in the share register
to whom the redemption claim was directed submit the name of a common arbitrator
within the prescribed period of time, the board of directors of the subsidiary
shall file an application with the court in the location where the company has
its registered offices for the appointment of a trustee. The trustee shall file
an application with the above-stated court for the appointment of such an
arbitrator and shall safeguard the interests of absent shareholders in the
dispute. (SFS 1994:802).
Chapter 14, Section 33
Where a dispute regarding redemption pursuant to section 31 is submitted for
determination by arbitrators or a court and where it is not disputed by the
parties that the right of redemption exists, or where such right has been
determined to exist through a final judgement without a simultaneous
determination of the redemption of the redemption sum, the shareholders shall be
obliged to surrender their share certificates to the parent company with a
notation of the transfer or, in respect to VPC companies, to permit the parent
company to be registered as the owner of the shares pursuant to the provisions
set forth in the Financial Instruments Accounts Act (SFS 1998:1497), provided
the parent company provides security approved by the arbitrators or, where the
dispute is pending in a court, by the court for any redemption sum plus
interest.
Shareholders shall have the right to reasonable interest on the redemption sum
for the period of time from the date on which security was provided until the
redemption sum becomes due and payable. (SFS 1998:1487)
Chapter 14, Section 34
Where a redemption sum has been offered to a shareholder without the shareholder
having surrendered his share certificates or, in respect of VPC companies,
without having permitted the parent company to be registered as owner, the
parent company shall deposit the redemption sum without delay pursuant to the
Deposit of Money in Escrow with Public Authorities Act (SFS 1927:56). In such
circumstances, the right to withdraw the deposited sum may not be reserved.
(SFS 1989:831).
2(4)
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Chapter 14, Section 35
Where security has been provided pursuant to section 33 or where a deposit has
been made pursuant to section 34, the parent company shall be deemed the owner
of the shares. Prior to the transfer to the parent company of the share
certificates of a subsidiary which is not a VPC company, the certificates in
such circumstances shall only entitle the holder to receipt of the redemption
sum plus interest upon transfer of the certificates to the parent company.
Where the share certificates have not been surrendered within one month from the
date on which the parent company became the owner of the shares, new share
certificates may be issued to the parent company. The new share certificates
shall contain a notation stating that they replace the older share certificates.
Where the older share certificates are thereafter surrendered to the parent
company, they shall be submitted to the subsidiary to be destroyed.
In circumstances set forth in the first sentences of the paragraph one, shares
in VPC companies shall, upon demand by the parent company as owner pursuant to
the Financial Instruments Act (1998:1487).
Minority shareholders auditors
Chapter 10, Section 9
A shareholder may propose that an auditor appointed by County Administrative
Board shall participate with the other auditors in an audit of the company.
The proposal shall be submitted to a meeting of the shareholders at which
election of auditors is to take place or at which such proposal is to be
addressed pursuant to the notice convening such meeting.
Where such proposal is supported by the owners of at least one-tenth of all
shares or by the owners of at least one-third of the shares present or
represented at the meeting , the County Administrative Board shall provide the
board of directors with an opportunity to comment on the appointment. The
appointment shall be until the close of the general meeting of the shareholders
held during the financial year immediately following. (SFS 1998:760).
Extraordinary general meetings of the shareholders
Chapter 9, Section 8, Paragraph 2
The board of directors shall also convene an extraordinary general meeting of
the shareholders where an auditor of the company or the owners of not less than
one tenth of the shares demand in writing that such a meeting be convened for a
3(4)
<PAGE>
specified purpose. In such case, the notice shall be issued within two weeks
following the receipt by the company of the demand therefor. (SFS 1998:760).
Shareholders' rights to propose business to the shareholders' meeting
Chapter 9, Section 11
A shareholder who wishes to have a matter addressed at a shareholders' meeting
shall submit a written demand for such to the board of directors. The matter
shall be addressed at the shareholders' meeting, provided the request was
received by the board of directors:
1. not later than one week prior to the earliest time pursuant to section 13,
first paragraph that notice of the shareholders' meeting may be issued; or
2. after the time specified in sub-section 1 above, but in due time for the
matter to be included in the notice of the shareholders' meeting. (SFS
1998:760).
General restrictions on the authority of representatives of the company
Chapter 8, Section 34
The board of directors or any other representative of the company may not
perform legal acts or other measures which might provide an undue advantage to a
shareholder or other person to the disadvantage of the company or another
shareholder.
Nor may a representative of the company comply with a resolution adopted by a
meeting of the shareholders or any other corporate body where such resolution is
void as a consequence of the fact that it contravenes this Act, applicable
legislation governing annual reports, or the articles of association of the
company. (SFS 1998:760).
General restrictions on resolutions by the shareholders` meeting
Chapter 9, Section 37
The shareholders' meeting may not adopt resolutions which may provide an undue
advantage to a shareholder or other person to the disadvantage of the company or
another shareholder. (SFS 1998:760).
4(4)
