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
May 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 May 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: May 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 17-May-99
Current Calculation Date 11-May-99
Previous Payment Date 15-Apr-99
Previous Calculation Date 09-Apr-99
<TABLE>
- ----------------------------------------------------------------------------------------
1. Account Activity Summary between Calculation Dates
- ----------------------------------------------------------------------------------------
Prior Deposits Withdrawals Balance on
Balance Calculation Date
9-Apr-99 11-May-99
- -------------------------------------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Expense Account 4,457,826.48 697,147.13 (908,633.92) 4,246,339.69
Collection Account 10,016,349.18 13,467,541.73 (10,016,349.18) 13,467,541.73
Aircraft Purchase Account - - - -
Liquidity Reserve cash balance 25,000,000.00 - - 25,000,000.00
- -------------------------------------------- --------------- -------------- --------------
Total 39,474,185.66 14,164,688.86 (10,924,983.10) 42,713,881.42
- -------------------------------------------- --------------- --------------- --------------
2. Analysis of Expenses Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 4,457,826.48
Transfer from Collection Account on previous Payment Date 679,301.04
Permitted Aircraft Accrual
Interim Transfer from Collection Account
Interest Income 17,846.09
Balance on current Calculation Date
- Payments on previous payment date (540,154.34)
- Interim payments (352,572.76)
- other (15,906.82)
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 4,246,339.69
- ----------------------------------------------------------------------------------------
3. Analysis of Collection Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 10,016,349.18
Collections during period
- lease rentals 9,586,771.00
- maintenance reserves 2,628,051.34
- other leasing income 1,108,519.14
- interest income 128,293.43
- interim transfer from Expense A/C 15,906.82
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 (679,301.04)
- Permitted Aircraft Modifications
Net Swap payments on previous Payment Date (799,625.00)
Aggregate Note Payments on previous Payment Date (8,537,423.14)
Interim Transfer to Expense Account
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 13,467,541.73
- ----------------------------------------------------------------------------------------
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 21,099,351.00 31,099,351.00
---------------
Liquidity Reserve Amount 66,099,351.00
---------------
Minimum Liquidity Reserve Amount
15,000,000.00
- ----------------------------------------------------------------------------------------
<PAGE>
Current Payment Date 17-May-99
Current Calculation Date 11-May-99
Previous Payment Date 15-Apr-99
Previous Calculation Date 9-Apr-99
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Balance in Collection Account 13,467,541.73
Liquidity Reserve Amount 66,099,351.00
------------------
Available Collections 79,566,892.73
==================
3. Analysis of Collection Account Activity (Continued)
- ----------------------------------------------------------------------------------------------------------------
Analysis of Current Payment Date Distributions
<S> <C> <C>
(I) Required Expense Amount 3,202,088.28
(II) a) Class A Interest but excluding Step-up 3,046,295.70
b) Swap Payments other than subordinated swap payments 978,888.89
(iii) a) Repayment of Primary Eligible Credit Facilities -
b) First Collection Account top-up (Minimum liquidity reserve $15 m)
(iv) Class A Minimum principal payment 15,000,000.00
(v) Class B Interest -
(vi) Class B Minimum principal payment 462,259.15
(vii) Class C Interest 315,733.19
(viii) Class C Minimum principal payment 575,000.00
(ix) Class D Interest -
(x) Class D Minimum principal payment 797,500.00
(xi) a) Secondary Eligible Credit Facilities (ILFC and Morgan Stanley Facilities) -
b) Second collection account top-up -
(xii) Class A Scheduled principal 51,099,351.00
(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 -
(xx) Class B Supplemental principal 4,089,776.53
(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 79,566,892.73
less collection Account Top Ups (iii) (b) and (xi) (b) above 66,099,351.00
----------------
13,467,541.73
================
<PAGE>
- ----------------------------------------------------------------------------------------------------------------
Current Payment Date 17-May-99
Current Calculation Date 11-May-99
Previous Payment Date 15-Apr-99
Previous Calculation Date 9-Apr-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 4.92625% 4.92625% 4.92625%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.13625% 5.27625% 5.57625%
Day Count Act/360 Act/360 Act/360
Actual Number of Days 32 32 32
Interest Amount Payable 1,826,222.22 1,220,073.47 462,259.15
Step-up Interest Amount Payable - NA NA
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total Interest Paid 1,826,222.22 1,220,073.47 462,259.15
- ----------------------------------------------------------------------------------------
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 400,000,000.00 263,569,942.19 93,574,522.50
- ----------------------------------------------------------------------------------------
Extended Pool Factors 100.00% 90.09% 99.21%
expected Pool Factors 100.00% 84.98% 95.42%
- ----------------------------------------------------------------------------------------
Extension Amount - - -
expected Pool Factor Amount - - -
Surplus Amortisation - 4,089,776.53 315,733.19
- ----------------------------------------------------------------------------------------
Total Principal Distribution Amount - 4,089,776.53 315,733.19
- ----------------------------------------------------------------------------------------
Redemption Amount
- - amount allocable to principal
- - amount allocable to premium
- ----------------------------------------------------------------------------------------
Closing Outstanding Principal Balance 400,000,000.00 256,053,821.39 92,944,350.01
- ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------
(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 17-May-99
Current Calculation Date 11-May-99
Previous Payment Date 15-Apr-99
Previous Calculation Date 9-Apr-99
- ----------------------------------------------------------------------------------------------
5. Floating Rate Note information for next Interest Accrual Period
Start of Interest Accrual Period 17-May-99
End of Interest Accrual Period 17-Jun-99
Reference Date 13-May-99
- ----------------------------------------------------------------------------------------------
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% 5.2525% 5.5525%
Actual Pool Factor 100.00% 75.31% 92.94%
- ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 76,512.82 93,260.08
Total Principal Payments - 1,202.88 315.73
Closing Outstanding Principal Balance 100,000.00 75,309.95 92,944.35
Total Interest 456.56 358.85 462.26
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 May 17, 1999
<TABLE>
----------------------------------------------------------------------------
Year to Date
% of Prospectus Gross Lease Revenues
- ----------------------------------------------------------------------------------------------------- -----------------------------
Period ending 15-May-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 9,586,772 144,092,604 156,776,391 (12,683,787) 91.9% 100.0% -8.1%
Repossession and other Stress 319 2,327,760 2,327,760 1.5% 0.0% 1.5%
Related Costs 266,473 1,658,728 (7,054,938) 8,713,665 1.1% -4.5% 5.6%
------------ ------------- ------------- ------------ ------- -------- ----------
Net Lease Rentals 9,853,564 148,079,092 149,721,454 (1,642,362) 94.5% 95.5% -1.0%
Maintenance Receipts 2,628,051 20,341,445 0 20,341,445 13.0% 0.0% 13.0%
Maintenance Expenses (79,463) (7,161,051) 0 (7,161,051) -4.6% 0.0% -4.6%
------------ ------------ -------------- ------------ ------- -------- ----------
Net Maintenance 2,548,588 13,180,394 0 13,180,394 8.4% 0.0% 8.4%
Interest Received 146,140 2,882,470 1,681,295 1,201,176 1.8% 1.1% 0.8%
Other leasing income
------------ ------------- ------------- ------------ ------- -------- ----------
Total Cash Received 12,548,291 164,141,956 151,402,748 12,739,208 104.7% 96.6% 8.1%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing and
other costs (22,632) (1,857,342) (5,487,174) 3,629,832 -1.2% -3.5% 2.3%
-(increase) / decrease in
Accrued Expenses (1,560,136) (6,195,377) (6,195,377) -4.0% 0.0% -4.0%
------------ ------------- ------------- ------------ ------- -------- ----------
subtotal (1,582,769) (8,052,718) (5,487,174) (2,565,544) -5.1% -3.5% -1.6%
SG&A
- Servicer Fees (463,441) (5,693,805) (6,437,264) 743,459 -3.6% -4.1% 0.5%
- Other Servicer provider
fees and Overhead (236,628) (2,941,497) (3,911,822) 970,324 -1.9% -2.5% 0.6%
------------ ------------- ------------- ------------ ------- -------- --------
subtotal (700,068) (8,635,302) (10,349,086) 1,713,784 -5.5% -6.6% 1.1%
------------ ------------- ------------- ------------ ------- -------- --------
Total Cash Expenses (2,282,837) (16,688,020) (15,836,260) (851,761) -10.6% -10.1% -0.5%
------------ ------------- ------------- ------------ ------- -------- ----------
NET CASH COLLECTIONS 10,265,454 147,453,936 135,566,489 11,887,447 94.1% 86.5% 7.6%
------------ ------------- ------------- ------------ ------- -------- ----------
Exceptional Items
- THY Note Distribution 27,143,085 27,143,085 0 17.3% 17.3% 0.0%
------------ ------------- ------------- ------------ ------- -------- ----------
TOTAL NET CASH COLLECTIONS 10,265,454 174,597,021 162,709,574 11,887,447 111.4% 103.8%% 7.6%
------------ ------------- ------------- ------------ ------- -------- ----------
Interest Payments (Net of
Swap effects) 5,859,944 83,375,189 84,666,913 (1,291,723) 53.2% 54.0% -0.8%
Principal Payments
A-1 0 0 0 0 0.0% 0.0% 0.0%
A-2 4,089,777 84,166,180 70,987,011 13,179,169 53.7% 45.3% 8.4%
B-1 315,733 7,055,650 7,055,650 (0) 4.5% 4.5% 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 4,405,510 91,221,830 78,042,661 13,179,169 58.2% 49.8% 8.4%
Total Payments to
Noteholders 10,265,454 174,597,020 162,709,574 11,887,446 111.4% 103.8% 7.6%
-----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------- ---------------------------------
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 May 17, 1999
<TABLE>
-------------------------------------------------------------------------------------------------------------------------------
Coverage Ratios
Closing Prospectus* Actual
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
a Net Cash Collections 162,709,574 176,197,020
b Swaps 6,628,425 7,939,371
c Class A Interest 50,830,169 48,359,127
d Class A Minimum 22,188,410 15,221,945
e Class B Interest 7,444,318 7,172,691
f Class B Minimum 7,055,650 7,055,650
g Class C Interest 8,280,000 8,346,667
h Class C Minimum - -
I Class D Interest 11,484,000 11,557,333
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 48,798,601 68,944,236
-- ------------ --------------
Total 162,709,574 176,197,020
-- ------------ --------------
Interest Coverage Ratio
Class A 3.20 3.64
Class B 2.02 2.49
Class C 1.70 2.05
Class D 1.52 1.80
Debt Coverage Ratio
Class A 1.52 1.80
Class B 1.52 1.80
Class C 1.52 1.80
Class D 1.52 1.80
Loan-to-Value Ratios
Assumed Portfolio Value 1,115,510,000 1,037,325,335
Adjusted Portfolio Value 1,004,150,560
Liquidity Reserve Amount
Of which - Cash 25,000,000 25,000,000 31,195,377
- Letters of Credit 40,000,000 41,099,351 41,099,351
-------------- ----------------- ------------------
Subtotal 65,000,000 66,099,351 72,294,728
Less Lessee
Security Deposit (20,000,000) (21,099,351) (21,099,351)
Less Accrued Expenses (6,195,377)
--------------------------- ------------- ----------------- ------------------
Subtotal 45,000,000 45,000,000 45,000,000
Total Asset Value 1,160,510,000 1,082,325,335 1,049,150,560
Note Balances at 15 May-99
<S> <C> <C> <C> <C> <C> <C>
Class A 740,000,000 63.8% 669,012,989 61.8% 655,833,820 62.5%
Class B 100,000,000 72.4% 92,944,350 70.4% 92,944,350 71.4%
Class C 100,000,000 81.0% 100,000,000 79.6% 100,000,000 80.9%
Class D 110,000,000 90.5% 110,000,000 89.8% 110,000,000 91.4%
-------------- -------------- ------------------
Total 1,050,000,000 971,957,339 958,778,170
-------------- -------------- ------------------
Assumed Portfolio Value as a Percent of Adjusted Portfolio 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
