SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
September 13, 1999
(Date of Earliest Event Reported)
MORGAN STANLEY AIRCRAFT FINANCE
(Exact Name of Registrant as Specified in Trust Agreement)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
333-56575 13-3375162
(Commission File (IRS Employer
Number) Identification No.)
Morgan Stanley Aircraft Finance
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1000
Attention: Corporate Trust Administration
(302) 651-1000
(Address and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
<PAGE>
Item 5. Other Events
Attached hereto as Exhibit A is a copy of a Monthly Report
to Noteholders dated September 13, 1999 sent to each holder of Notes due March
15, 2023 of Morgan Stanley Aircraft Finance.
2
<PAGE>
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 hereto duly authorized.
MORGAN STANLEY AIRCRAFT FINANCE
Date: September 13, 1999 By: /s/ Alexander Frank
-------------------------------
Signatory Trustee
3
<PAGE>
EXHIBIT INDEX
Exhibit A - Report to Noteholders
4
MORGAN STANLEY AIRCRAFT FINANCE
Report to Noteholders
All amounts in US dollars unless otherwise stated
Payment Date 15th of each month
Convention Modified Following Business Day
Current Payment Date 15-Sep-99
Current Calculation Date 9-Sep-99
Previous Payment Date 16-Aug-99
Previous Calculation Date 10-Aug-99
- --------------------------------------------------------------------------------
<TABLE>
1. Account Activity Summary between Calculation Dates
- ----------------------------------------------------------------------------------------------------
Prior Deposits Withdrawals Balance on
Balance Calculation Date
10-Aug-99 9-Sep-99
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expense Account 3,309,982.58 2,506,893.76 (4,122,028.36) 1,694,847.98
Collection Account 10,014,410.53 12,179,215.39 (10,014,410.52) 12,179,215.40
Aircraft Purchase Account - - - -
Liquidity Reserve cash balance 25,000,000.00 - - 25,000,000.00
- ----------------------------------------------------------------------------------------------------
Total 38,324,393.11 14,686,109.15 (14,136,438.88) 38,874,063.38
- ----------------------------------------------------------------------------------------------------
2. Analysis of Expenses Account Activity
- ----------------------------------------------------------------------------------------------------
Opening Balance on Previous Calculation Date 3,309,982.58
Transfer from Collection Account on previous Payment Date 2,506,893.76
Permitted Aircraft Accrual
Interim Transfer to Collection Account (16,026.10)
Interest Income 16,026.10
Balance on current Calculation Date
- Payments on previous payment date (624,471.82)
- Interim payments (3,497,556.54)
- other
- ----------------------------------------------------------------------------------------------------
Balance on current Calculation Date 1,694,847.98
- ----------------------------------------------------------------------------------------------------
3. Analysis of Collection Account Activity
- ----------------------------------------------------------------------------------------------------
Opening Balance on Previous Calculation Date 10,014,410.53
Collections during period
- lease rentals 10,618,475.00
- maintenance reserves 1,402,333.00
- other leasing income 206.00
- interest income 142,175.29
- interim transfer from Expense A/C 16,026.10
Transfers from Aircraft Purchase Account -
Drawings under Credit or Liquidity Enhancement Facilities -
Repayment of Drawings under Credit or Liquidity Enhancement Facilities -
Transfer to Expense Account on previous Payment Date
- Required Expense Amount (2,506,893.76)
- Permitted Aircraft Modifications
Net Swap payments on previous Payment Date (658,381.94)
Aggregate Note Payments on previous Payment Date (6,849,134.82)
Interim Transfer to Expense Account
- ----------------------------------------------------------------------------------------------------
Balance on current Calculation Date 12,179,215.40
- ----------------------------------------------------------------------------------------------------
Analysis of Liquidity Reserve Amount
First Collection Account Reserve 15,000,000.00
Second Collection Account Reserve 10,000,000.00
Morgan Stanley Facility 10,000,000.00
ILFC Facility
- Letter of Credit 10,000,000.00
- Cash Security Deposits 20,003,351.00 30,003,351.00
------------------
Liquidity Reserve Amount 65,003,351.00
------------------
Minimum Liquidity Reserve Amount 15,000,000.00
- ----------------------------------------------------------------------------------------------------
</TABLE>
Page 1 of 4
<PAGE>
MORGAN STANLEY AIRCRAFT FINANCE
Report to Noteholders
All amounts in US dollars unless otherwise stated
Current Payment Date 15-Sep-99
Current Calculation Date 9-Sep-99
Previous Payment Date 16-Aug-99
Previous Calculation Date 10-Aug-99
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Balance in Collection Account 12,179,215.40
Liquidity Reserve Amount 65,003,351.00
------------------
Available Collections 77,182,566.40
==================
3. Analysis of Collection Account Activity (Continued)
- -----------------------------------------------------------------------------------------------------------
Analysis of Current Payment Date Distributions
(i) Required Expense Amount 2,736,304.19
(ii) a) Class A Interest but excluding Step-up 2,972,864.18
b) Swap Payments other than subordinated swap payments 549,312.50
(iii) a) Repayment of Primary Eligible Credit Facilities -
b) First Collection Account top-up (Minimum liquidity reserve $15 m) 15,000,000.00
(iv) Class A Minimum principal payment -
(v) Class B Interest 453,718.32
(vi) Class B Minimum principal payment 320,942.99
(vii) Class C Interest 575,000.00
(viii) Class C Minimum principal payment -
(ix) Class D Interest 797,500.00
(x) Class D Minimum principal payment -
(xi) a) Secondary Eligible Credit Facilities (ILFC and Morgan Stanley Facilities) -
b) Second collection account top-up 50,003,351.00
(xii) Class A Scheduled principal -
(xiii) Class B Scheduled principal -
(xiv) Class C Scheduled principal -
(xv) Class D Scheduled principal -
(xvi) Permitted accruals for Modifications
(xvii) Step-up interest -
(xviii) Beneficial interest -
(xix) Class A Supplemental principal 3,773,573.22
(xx) Class B Supplemental principal -
(xxi) Class D Redemption Price -
(xxii) Class C Redemption Price -
(xxiii) Class B Redemption Price -
(xxiv) Class A Redemption Price -
(xxv) Subordinated Swap payments -
(xxvi) all remaining amounts to holders of Beneficial interests
Total Payments with respect to Payment Date 77,182,566.40
less collection Account Top Ups (iii) (b) and (xi) (b) above 65,003,351.00
------------------
12,179,215.40
==================
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Page 2 of 4
<PAGE>
MORGAN STANLEY AIRCRAFT FINANCE
Report to Noteholders
All amounts in US dollars unless otherwise stated
Current Payment Date 15-Sep-99
Current Calculation Date 9-Sep-99
Previous Payment Date 16-Aug-99
Previous Calculation Date 10-Aug-99
- --------------------------------------------------------------------------------
<TABLE>
4. Payments on the Notes by Subclass
- ----------------------------------------------------------------------------------------
Subclass Subclass Subclass
(a) Floating Rate Notes A-1 A-2 B-1
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Applicable LIBOR 5.26875% 5.26875% 5.26875%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.47875% 5.61875% 5.91875%
Day Count Act/360 Act/360 Act/360
Actual Number of Days 30 30 30
Interest Amount Payable 1,826,250.00 1,146,614.18 453,718.32
Step-up Interest Amount Payable - NA NA
- ----------------------------------------------------------------------------------------
Total Interest Paid 1,826,250.00 1,146,614.18 453,718.32
- ----------------------------------------------------------------------------------------
Expected Final Payment Date 15-Mar-00 15-Sep-05 15-Mar-13
Excess Amortisation Date 15-Mar-00 15-Apr-98 15-Apr-98
- ----------------------------------------------------------------------------------------
Original Balance 400,000,000.00 340,000,000.00 100,000,000.00
Opening Outstanding Principal Balance 400,000,000.00 244,883,117.38 91,989,352.91
- ----------------------------------------------------------------------------------------
Extended Pool Factors 100.00% 87.18% 97.97%
expected Pool Factors 100.00% 80.55% 94.12%
- ----------------------------------------------------------------------------------------
Extension Amount - - -
expected Pool Factor Amount - - -
Surplus Amortisation - 3,773,573.22 320,942.99
- ----------------------------------------------------------------------------------------
Total Principal Distribution Amount - 3,773,573.22 320,942.99
- ----------------------------------------------------------------------------------------
Redemption Amount
- - amount allocable to principal
- - amount allocable to premium
- ----------------------------------------------------------------------------------------
Closing Outstanding Principal Balance 400,000,000.00 241,109,544.16 91,668,409.92
- ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- ------------------------------------------------------------------------
Applicable Interest Rate 6.90000% 8.70000%
Day count 30 / 360 30 / 360
Number of Days 30 30
Interest Amount Payable 575,000.00 797,500.00
- ------------------------------------------------------------------------
Total Interest Paid 575,000.00 797,500.00
- ------------------------------------------------------------------------
Expected Final Payment Date 15-Mar-13 15-Mar-14
Excess Amortisation Date 15-Mar-13 15-Mar-10
Opening Outstanding Principal Balance 100,000,000.00 110,000,000.00
- ------------------------------------------------------------------------
Extended Pool Factors 100.00% 100.00%
expected Pool Factors 100.00% 100.00%
- ------------------------------------------------------------------------
Extended Amount - -
expected Pool Factor amount - -
- ------------------------------------------------------------------------
Total Principal Distribution Amount - -
- ------------------------------------------------------------------------
Redemption Amount - -
- - amount allocable to principal - -
- - amount allocable to premium - -
- ------------------------------------------------------------------------
Closing Outstanding Principal Balance 100,000,000.00 110,000,000.00
- ------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
Page 3 of 4
<PAGE>
MORGAN STANLEY AIRCRAFT FINANCE
Report to Noteholders
All amounts in US dollars unless otherwise stated
Current Payment Date 15-Sep-99
Current Calculation Date 9-Sep-99
Previous Payment Date 16-Aug-99
Previous Calculation Date 10-Aug-99
- --------------------------------------------------------------------------------
5. Floating Rate Note information for next Interest Accrual Period
Start of Interest Accrual Period 15-Sep-99
End of Interest Accrual Period 15-Jun-99
Reference Date 11-Sep-99
- --------------------------------------------------------------------------------
A-1 A-2 B-1
- --------------------------------------------------------------------------------
Applicable LIBOR 5.38000% 5.38000% 5.3800%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.47875% 5.6188% 5.9188%
Actual Pool Factor 100.00% 70.91% 91.67%
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------
Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------
Actual Pool Factor 100.00% 100.00%
- -------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. Payments per $ 100,000 Inital Outstanding Principal Balance of Notes
- --------------------------------------------------------------------------------
(a) Floating Rate Notes A-1 A-2 B-1
- --------------------------------------------------------------------------------
Opening Outstanding Principal Balance 100,000.00 72,024.45 91,989.35
Total Principal Payments - 1,109.87 320.94
Closing Outstanding Principal Balance 100,000.00 70,914.57 91,668.41
Total Interest 456.56 337.24 453.72
Total Premium - - -
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------
Opening Outstanding Principal Balance 100,000.00 100,000.00
Total Principal Payments - -
Closing Outstanding Principal Balance 100,000.00 100,000.00
Total Interest 575.00 725.00
Total Premium - -
- -------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 4 of 4
<PAGE>
<TABLE>
Morgan Stanley Aircraft Finance Comparison of Actual to Date Cashflows versus Prospectus
- --------------------------------------------------------------------------------------------------------------------
15-Sep-99 Actual Actual Prospectus * Variance
To Date To Date
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Collections
Gross Lease Rentals 10,618,475 182,244,620 201,065,260 (18,820,640)
Other leasing income 206 2,768,161 2,768,161
Security Deposits 0 4,006,650 4,006,650
Repossession/Stress Related Costs - Actual (122,869) (1,910,517) (9,047,937) 7,137,419
Repossession/Stress Related Costs - Accrued 0 (45,015)
---------------------------------------------------------
Net Lease Rentals 10,495,812 187,063,899 192,017,323 (4,908,410)
Maintenance Receipts 1,402,333 26,396,839 0 26,396,839
Maintenance Expenses- Actual (3,163,941) (14,617,461) 0 (14,617,461)
Maintenance Expenses - Accrued 1,233,396 (3,725,587) (3,725,587)
---------------------------------------------------------
Net Maintenance (528,213) 8,053,791 0 8,053,791
Interest Received 158,201 3,507,997 2,148,279 1,359,718
---------------------------------------------------------
Total Cash Collections 10,125,800 198,625,687 194,165,602 4,505,100
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing and other costs - Actual (190,759) (1,837,907) (7,037,284) 5,199,377
- Insurance, re-leasing and other costs - Accrued 94,951 (1) (1)
---------------------------------------------------------
subtotal (95,808) (1,837,908) (7,037,284) 5,199,376
SG&A
- Servicer Fees (422,518) (7,420,186) (8,638,090) 1,217,904
- Other Servicer provider fees and Overhead - Actual (164,564) (4,016,693) (5,016,982) 1,000,289
- Other Servicer provider fees and Overhead - Accrued 0 (93,472) (93,472)
---------------------------------------------------------
subtotal (587,082) (11,530,352) (13,655,072) 2,124,720
Interest Payments (Net of Swap Payments) (5,348,395) (105,178,467) (107,499,094) 2,320,627
---------------------------------------------------------
Total Cash Expenses & Interest Payments (6,031,285) (118,546,726) (128,191,450) 9,644,724
- --------------------------------------------------------------------------------------------------------------------
Net Cash Collections 4,094,515 80,078,961 65,974,152 14,104,809
- --------------------------------------------------------------------------------------------------------------------
Exceptional Items
- THY Note Distribution 27,143,085 27,143,085 0
- --------------------------------------------------------------------------------------------------------------------
Cash Collections Available for Distribution 4,094,515 107,222,046 93,117,237 14,104,809
- --------------------------------------------------------------------------------------------------------------------
Principal Payments
A-1 0 0 0 0
A-2 3,773,572 98,890,455 84,785,646 14,104,808
B-1 320,943 8,331,590 8,331,590 (0)
C-1 0 0 0 0
D-1 0 0 0 0
---------------------------------------------------------
subtotal 4,094,515 107,222,045 93,117,237 14,104,808
- --------------------------------------------------------------------------------------------------------------------
Total Payments to Noteholders 4,094,515 107,222,045 93,117,237 14,104,808
- --------------------------------------------------------------------------------------------------------------------
Benefical Interest Distributions 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ---------------------------------------------------------- ------------------------------------
Actual Prospectus * Variance
- ---------------------------------------------------------- ------------------------------------
<S> <C> <C> <C>
Cash Collections
Gross Lease Rentals 90.6% 100.0% -9.4%
Other leasing income 1.4% 0.0% 1.4%
Security Deposits 2.0% 2.0%
Repossession/Stress Related Costs - Actual -1.0% -4.5% 3.5%
Repossession/Stress Related Costs - Accrued 0.0% 0.0% 0.0%
------------------------------------
Net Lease Rentals 93.0% 95.5% -2.4%
Maintenance Receipts 13.1% 0.0% 13.1%
Maintenance Expenses- Actual -7.3% 0.0% -7.3%
Maintenance Expenses - Accrued -1.9% 0.0% -1.9%
------------------------------------
Net Maintenance 4.0% 0.0% 4.0%
Interest Received 1.7% 1.1% 0.7%
------------------------------------
Total Cash Collections 98.8% 96.6% 2.2%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing and other costs - Actual -0.9% -3.5% 2.6%
- Insurance, re-leasing and other costs - Accrued 0.0% 0.0% 0.0%
------------------------------------
subtotal -0.9% -3.5% 2.6%
SG&A
- Servicer Fees -3.7% -4.3% 0.6%
- Other Servicer provider fees and Overhead - Actual -2.0% -2.5% 0.5%
- Other Servicer provider fees and Overhead - Accrued 0.0% 0.0% 0.0%
------------------------------------
subtotal -5.7% -6.8% 1.1%
Interest Payments (Net of Swap Payments) -52.3% -53.5% 1.2%
------------------------------------
Total Cash Expenses & Interest Payments -59.0% -63.8% 4.8%
- ---------------------------------------------------------- ------------------------------------
Net Cash Collections 39.8% 32.8% 7.0%
- ---------------------------------------------------------- ------------------------------------
Exceptional Items
- THY Note Distribution 13.5% 13.5% 0.0%
- ---------------------------------------------------------- ------------------------------------
Cash Collections Available for Distribution 53.3% 46.3% 7.0%
- ---------------------------------------------------------- ------------------------------------
Principal Payments
A-1 0.0% 0.0% 0.0%
A-2 49.2% 42.2% 7.0%
B-1 4.1% 4.1% 0.0%
C-1 0.0% 0.0% 0.0%
D-1 0.0% 0.0% 0.0%
------------------------------------
subtotal 53.3% 46.3% 7.0%
- ---------------------------------------------------------- ------------------------------------
Total Payments to Noteholders 53.3% 46.3% 7.0%
- ---------------------------------------------------------- ------------------------------------
Benefical Interest Distributions 0.0% 0.0% 0.0%
- ---------------------------------------------------------- ------------------------------------
*Prospectus Cash Collections and Cash Expenses have been adjusted for non-delivery of
THY Aircraft, msn 25272.
Total Accrued Expenses on Payment Date: 15-Sep-99 (3,864,075)
-----------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------
Coverage Ratios
Closing Prospectus* Actual
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
a Net Cash Collections 93,117,237 214,000,512
b Swaps 8,305,641 10,786,302
c Class A Scheduled -
d Class A Interest 64,473,208 60,042,508
e Class A Minimum 22,188,410 15,221,945
f Class B Interest 9,466,246 8,955,657
g Class B Minimum 8,331,590 8,331,590
h Class C Interest 10,580,000 10,646,667
I Class C Minimum - -
j Class D Interest 14,674,000 14,747,333
k Class D Minimum - -
l Class A Scheduled - -
m Class B Scheduled - -
n Class C Scheduled - -
o Class D Scheduled - -
p Permited Aircraft Modifications - 1,600,000
q Class A Supplemental 62,597,236 83,668,510
-------------- ------------
Total 200,616,331 214,000,512
-------------- ------------
Interest Coverage Ratio
Class A 1.44 3.56
Class B 0.97 2.54
Class C 0.81 2.07
Class D 0.72 1.81
Debt Coverage Ratio
Class A 0.72 1.81
Class B 0.72 1.81
Class C 0.72 1.81
Class D 0.72 1.81
Loan-to-Value Ratios
Assumed Portfolio Value 1,115,510,000 1,023,084,932
Adjusted Portfolio Value 990,342,830
Liquidity Reserve Amount
Of which - Cash 25,000,000 25,000,000 28,864,075
- Letters of Credit held 40,000,000 40,003,351 40,003,351
-------------- -------------- ------------
Subtotal 65,000,000 65,003,351 68,867,426
Less Lessee Security Deposits (20,000,000) (20,267,351) (20,267,351)
Less Accrued Expenses (1)
-------------- -------------- ------------
Subtotal 45,000,000 44,736,000 48,600,074
Total Asset Value 1,160,510,000 1,067,820,932 1,038,942,904
Note Balance15-Sep-99
Class A 740,000,000 63.8% 655,214,354 61.4% 641,109,545 61.7%
Class B 100,000,000 72.4% 91,668,410 69.9% 91,668,410 70.5%
Class C 100,000,000 81.0% 100,000,000 79.3% 100,000,000 80.2%
Class D 110,000,000 90.5% 110,000,000 89.6% 110,000,000 90.7%
-------------- -------------- ------------
Total 1,050,000,000 956,882,763 942,777,955
-------------- -------------- ------------
103.3%
- ------------------------------------------------------------------------------------------------
<PAGE>
1. Interest Coverage Ratio is equal to Net Cash Collections expressed as a ratio
of the interest payable on each subclass of Notes plus the interest and minimum
principal payments payable on each subclass of Notes that rank senior in
priority of payment to the relevant subclass of Notes.
2. Debt Service Ratio is equal to Net Cash Collections expressed as a ratio of
the interest and minimum and scheduled principal payments payable on each
subclass of Notes plus the interest and minimum and scheduled principal payments
payable on each subclass of Notes that ranks equally with or senior to the
relevant subclass of Notes in the priority of payments.
3. Total Asset Value is equal to Total Assumed Portfolio Value plus Liquidity
Reserve Amount minus Lessee Security Deposits.
4. Assumed Portfolio Value represents the Inital Appraised Value of each
aircraft in the Portfolio multipled by the Depreciation Factor at Calculation
date divided by the Depreciation Factor at Closing date.
5. Adjusted Portfolio Value represents the Base Value of each aircraft in the
Portfolio as detemined by the most recent Appraisal multipled by the
Depreciation Factor at Calculation date divided by the Depreciation Factor at
Closing date.
6. The lower of the Assumed Portfolio Value or 105% of the Adjusted Portfolio
Value is used to calculate the principal repayment amounts to Noteholders.
</TABLE>
