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
June 14, 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 June 14, 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: June 14, 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-Jun-99
Current Calculation Date 9-Jun-99
Previous Payment Date 17-May-99
Previous Calculation Date 11-May-99
<TABLE>
- ---------------------------------------------------------------------------------------------------
1. Account Activity Summary between Calculation Dates
- ---------------------------------------------------------------------------------------------------
Prior Deposits Withdrawals Balance on
Balance Calculation Date
11-May-99 9-Jun-99
- -------------------------------------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Expense Account 4,246,339.69 3,221,189.14 (2,986,073.54) 4,481,455.29
Collection Account 13,467,541.73 12,630,432.17 (13,467,541.73) 12,630,432.17
Aircraft Purchase Account - - - -
Liquidity Reserve cash balance 25,000,000.00 - - 25,000,000.00
- -------------------------------------------- --------------- -------------- --------------
Total 42,713,881.42 15,851,621.31 (16,453,615.27) 42,111,887.45
- -------------------------------------------- --------------- --------------- --------------
2. Analysis of Expenses Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 4,246,339.69
Transfer from Collection Account on previous Payment Date 3,202,088.28
Permitted Aircraft Accrual
Interim Transfer from Collection Account
Interest Income 19,100.86
Balance on current Calculation Date
- Payments on previous payment date (641,318.41)
- Interim payments (2,326,909.04)
- other (17,846.09)
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 4,481,455.29
- ----------------------------------------------------------------------------------------
3. Analysis of Collection Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 13,467,541.73
Collections during period
- lease rentals 10,264,225.00
- maintenance reserves 1,138,445.00
- other leasing income 1,069,818.00
- interest income 140,098.08
- interim transfer from Expense A/C 17,846.09
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 (3,202,088.28)
- Permitted Aircraft Modifications
Net Swap payments on previous Payment Date (978,888.89)
Aggregate Note Payments on previous Payment Date (9,286,564.56)
Interim Transfer to Expense Account
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 12,630,432.17
- ----------------------------------------------------------------------------------------
Analysis of Liquidity Reserve Amount
<S> <C> <C>
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 20,267,351.00 30,267,351.00
---------------
Liquidity Reserve Amount 65,267,351.00
---------------
Minimum Liquidity Reserve Amount
15,000,000.00
- ----------------------------------------------------------------------------------------
<PAGE>
Current Payment Date 15-Jun-99
Current Calculation Date 9-Jun-99
Previous Payment Date 17-May-99
Previous Calculation Date 11-May-99
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Balance in Collection Account 12,630,432.17
Liquidity Reserve Amount 65,267,351.00
------------------
Available Collections 77,897,783.17
==================
3. Analysis of Collection Account Activity (Continued)
- ----------------------------------------------------------------------------------------------------------------
Analysis of Current Payment Date Distributions
<S> <C> <C>
(I) Required Expense Amount 2,656,045.08
(II) a) Class A Interest but excluding Step-up 2,730,771.06
b) Swap Payments other than subordinated swap payments 762,361.11
(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 415,725.88
(vi) Class B Minimum principal payment 317,030.50
(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 50,267,351.00
(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 4,375,998.54
(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 77,897,783.17
less collection Account Top Ups (iii) (b) and (xi) (b) above 65,267,351.00
----------------
12,630,432.17
================
<PAGE>
- ----------------------------------------------------------------------------------------------------------------
Current Payment Date 15-Jun-99
Current Calculation Date 9-Jun-99
Previous Payment Date 17-May-99
Previous Calculation Date 11-May-99
- ----------------------------------------------------------------------------------------
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 4.90250% 4.90250% 4.90250%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.11250% 5.25250% 5.55250%
Day Count Act/360 Act/360 Act/360
Actual Number of Days 29 29 29
Interest Amount Payable 1,647,361.11 1,083,409.95 415,725.88
Step-up Interest Amount Payable - NA NA
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total Interest Paid 1,647,361.11 1,083,409.95 415,725.88
- ----------------------------------------------------------------------------------------
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 400,000,000.00 256,053,821.39 92,944,350.01
- ----------------------------------------------------------------------------------------
Extended Pool Factors 100.00% 89.35% 98.91%
expected Pool Factors 100.00% 83.59% 95.10%
- ----------------------------------------------------------------------------------------
Extension Amount - - -
expected Pool Factor Amount - - -
Surplus Amortisation - 4,375,998.54 317,030.50
- ----------------------------------------------------------------------------------------
Total Principal Distribution Amount - 4,375,998.54 317,030.50
- ----------------------------------------------------------------------------------------
Redemption Amount
- - amount allocable to principal
- - amount allocable to premium
- ----------------------------------------------------------------------------------------
Closing Outstanding Principal Balance 400,000,000.00 251,677,822.85 92,627,319.51
- ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- ------------------------------------------------------------------------
<S> <C> <C>
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
- ------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Current Payment Date 15-Jun-99
Current Calculation Date 9-Jun-99
Previous Payment Date 17-May-99
Previous Calculation Date 11-May-99
- ----------------------------------------------------------------------------------------------
5. Floating Rate Note information for next Interest Accrual Period
Start of Interest Accrual Period 15-Jun-99
End of Interest Accrual Period 15-Jun-99
Reference Date 11-Jun-99
- ----------------------------------------------------------------------------------------------
A-1 A-2 B-1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Applicable LIBOR 4.98750% 4.98750% 4.98750%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.19750% 5.3375% 5.6375%
Actual Pool Factor 100.00% 74.02% 92.63%
- ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------------------
<S> <C> <C>
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
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Opening Outstanding Principal Balance 100,000.00 75,309.95 92,944.35
Total Principal Payments - 1,287.06 317.03
Closing Outstanding Principal Balance 100,000.00 74,022.89 92,627.32
Total Interest 411.84 318.65 415.73
Total Premium - - -
- ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------------------
<S> <C> <C>
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 - -
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Comparison of Actual to Date Cashflows versus Prospectus
From March 3, 1998 (Note Issuance Date) to June 15, 1999
<TABLE>
----------------------------------------------------------------------------
Year to Date
% of Prospectus Gross Lease Revenues
- ----------------------------------------------------------------------------------------------------- -----------------------------
Period ending 15-Jun-99 Actual Actual Prospectus * Variance Actual Prospectus * Variance
To Date To Date
- --------------------------------------------------------------------------------------------------- -------------------------------
Cash Collections
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Lease Rentals 10,264,225 154,136,8290 168,988,165 (14,851,336) 91.2% 100.0% -8.8%
Other Leasing Income 19,818 2,247,578 2,247,578 1.3% 0.0% 1.3%
Repossession and other Stress
Related Costs 1,204,296 2,863,024 (7,604,467) 10,467,491 1.7% -4.5% 6.2%
------------ ------------ ------------- ------------ ------- -------- ----------
Net Lease Rentals 11,488,339 159,247,431 161,383,697 (2,136,267) 94.2% 95.5% -1.3%
Maintenance Receipts 1,138,445 21,479,890 0 21,479,890 12.7% 0.0% 12.7%
Maintenance Expenses (1,482,804) (8,643,855) 0 (8,643,855) -5.1% 0.0% -5.1%
------------ ------------ -------------- ------------ ------- -------- ----------
Net Maintenance (344,359) 12,836,035 0 12,836,035 7.6% 0.0% 7.6%
Interest Received 159,198 3,041,669 1,798,041 1,243,628 1.8% 1.1% 0.7%
------------ ------------- ------------- ------------ ------- -------- ----------
Total Cash Received 11,303,178 175,125,134 163,181,738 11,943,396 103.6% 96.6% 7.1%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing and
other costs (192,302) (2,049,644) (5,914,586) 3,864,942 -1.2% -3.5% 2.3%
-(increase) / decrease in
Accrued Expenses (409,704) (6,505,081) (6,505,081) -3.8% 0.0% -3.8%
------------ ------------- ------------- ------------ ------- -------- ----------
subtotal (602,007) (8,554,724) (5,914,586) (2,640,139) -5.1% -3.5% -1.6%
SG&A
- Servicer Fees (425,398) (6,119,203) (7,017,850) 898,647 -3.6% -4.2% 0.5%
- Other Servicer provider
fees and Overhead (301,387) (3,242,884) (4,204,086) 961,202 -1.9% -2.5% 0.6%
------------ ------------- ------------- ------------ ------- -------- --------
subtotal (726,785) (9,362,087) (11,221,936) 1,859,849 -5.5% -6.6% 1.1%
------------ ------------- ------------- ------------ ------- -------- --------
Total Cash Expenses (1,328,792) (17,916,812) (17,136,522) (780,290) -10.6% -10.1% -0.5%
------------ ------------- ------------- ------------ ------- -------- ----------
NET CASH COLLECTIONS 9,974,386 157,208,322 146,045,216 11,163,106 93.0% 86.4% 6.6%
------------ ------------- ------------- ------------ ------- -------- ----------
Exceptional Items
- THY Note Distribution 27,143,085 27,143,085 0 16.1% 16.1% 0.0%
------------ ------------- ------------- ------------ ------- -------- ----------
TOTAL NET CASH COLLECTIONS 9,974,386 184,351,407 173,188,301 11,163,106 109.1% 102.5% 6.6%
------------ ------------- ------------- ------------ ------- -------- ----------
Interest Payments (Net of
Swap effects) 5,281,358 88,656,548 90,406,145 (1,749,597) 52.5% 53.5% -1.0%
Principal Payments
A-1 0 0 0 0 0.0% 0.0% 0.0%
A-2 4,375,998 88,322,178 75,409,476 12,912,702 52.3% 44.6% 7.6%
B-1 317,030 7,372,680 7,372,680 (0) 4.4% 4.4% 0.0%
C-1 0 0 0 0 0.0% 0.0% 0.0%
D-1 0 0 0 0 0.0% 0.0% 0.0%
------------ ------------- ------------- ------------ ------- -------- ----------
subtotal 4,693,028 95,694,859 82,782,156 12,912,702 56.6% 49.0% 7.6%
Total Payments to
Noteholders 9,974,386 184,351,406 173,188,301 11,163,105 109.1% 102.5% 6.6%
-----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------- ---------------------------------
Benefical Interest Distributions 0 (0) 0 (0) 0.0% 0.0% 0.0%
- ---------------------------------------------------------------------------------------------- ---------------------------------
</TABLE>
*Prospectus Cash Collections and Cash Expenses have been adjusted for
non-delivery of THY Aircraft, msn 25272.
<PAGE>
Comparison of Actual to Date Cashflows versus Prospectus
From March 3, 1998 (Note Issuance Date) to June 15, 1999
<TABLE>
- ---------------------------------------------------------------------------------------------
Coverage Ratios
Closing Prospectus* Actual
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
a Net Cash Collections 173,188,301 185,951,406
b Swaps 7,016,977 8,701,732
k Class A Scheduled - 8,701,732
c Class A Interest 54,296,124 51,089,898
d Class A Minimum 22,188,410 15,221,945
e Class B Interest 7,956,545 7,588,417
f Class B Minimum 7,372,680 7,372,680
g Class C Interest 8,855,000 8,921,667
h Class C Minimum - -
I Class D Interest 12,281,500 12,354,833
j Class D Minimum - -
k Class A Scheduled - -
l Class B Scheduled - -
m Class C Scheduled - -
n Class D Scheduled - -
o Permited Aircraft Modifications - 1,600,000
p Class A Supplemental 53,221,066 73,100,234
-------------- -----------
Total 173,188,301 194,653,139
-------------- -----------
Interest Coverage Ratio
Class A 3.19 3.64
Class B 2.05 2.52
Class C 1.72 2.06
Class D 1.53 1.81
Debt Coverage Ratio
Class A 1.53 1.81
Class B 1.53 1.81
Class C 1.53 1.81
Class D 1.53 1.81
Loan-to-Value Ratios
Assumed Portfolio Value 1,115,510,000 1,033,787,048
Adjusted Portfolio Value 1,000,719,772
Liquidity Reserve Amount
Of which - Cash 25,000,000 25,000,000 31,505,081
- Letters of
Credit held 40,000,000 40,267,351 40,267,351
----------- -------------- -----------
Subtotal 65,000,000 65,267,351 71,772,432
Less Lessee Security
Deposits (20,000,000) (20,267,351) (20,267,351)
Less Accrued Expenses (6,505,081)
------------- -------------- -----------
Subtotal 45,000,000 45,000,000 45,000,000
Total Asset Value 1,160,510,000 1,078,787,048 1,045,719,772
</TABLE>
<TABLE>
Note Balance as at 15-Jun-99
<S> <C> <C> <C> <C> <C> <C>
Class A 740,000,000 63.8% 664,590,524 61.6% 651,677,822 62.3%
Class B 100,000,000 72.4% 92,627,320 70.2% 92,627,320 71.2%
Class C 100,000,000 81.0% 100,000,000 79.5% 100,000,000 80.7%
Class D 110,000,000 90.5% 110,000,000 89.7% 110,000,000 91.3%
----------- ------------- -----------
Total 1,050,000,000 967,217,844 954,305,141
------------- ------------- -----------
103.3%
- ----------------------------------------------------------------------------------------------------
</TABLE>
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
