Turkish airline operator SunExpress has received €151mn of financing guaranteed by the US Export-Import Bank (US Exim), for the delivery of five Boeing 737-800 aircraft.
The funds were provided by ING and BNP Paribas in the form of five separate 12-year loans structured as French leases.
US Exim support was issued in May 2015, before the bank’s authorisation lapsed. Despite having since been reauthorised, the bank hasn’t been able to approve transactions of over US$10mn since July 2015, as Congress is blocking the appointment of the last board member needed to make decisions for higher amounts valid.
Gemma Bae, managing director of ING Capital’s structured export finance team in New York, tells GTR: “We and SunExpress were fortunate because they had deliveries that they were going to finance with US Exim support in 2015 and 2016, so US Exim decided to issue one approval to cover both.”
The five deliveries financed by this deal were completed between April and June 2016.
ING Capital in New York and BNP Paribas served as debt arrangers of the US Exim financing. ING Capital also acts as guarantee agent. BNP Paribas took on the role of lease investor and lease arranger, and acts as US Exim loan paying agent. The US Exim-guaranteed lenders are ING Wholesale Banking Germany and BNP Paribas.
The French lease was structured by BNP Paribas, based on a tax treaty between Turkey and France. This type of structure has been used by Turkish Airlines in the past, with support from US Exim, but it was a first for SunExpress.
“The French lease structure was many degrees more complicated than a straight-forward US Exim-guaranteed debt financing. Combining US Exim debt with a French lease, you had to take US Exim requirements into consideration, but also had French tax requirements to comply with. We had to contort ourselves multiples times in order for the financing to meet both US Exim and French requirements,” Bae adds.
SunExpress is a new client for ING, but that the bank expects to continue working with the airline.
Fatih Meriç, finance and accounting director at SunExpress, says: “We have had healthy and successful growth over the last four years. In addition, our success story has been topped off with an order for 50 Boeing 737-800 NG/MAX aircraft and an option to purchase an additional 10 aircraft. Thanks to the support from ING and BNP Paribas, SunExpress was able to finance five aircraft under the guarantee of the esteemed export credit agency, US Exim. Their experience and flexibility facilitated this very first French lease transaction for our company. We believe this synergy will pave the way for future co-operation in expanding our fleet.”
Pillsbury Winthrop Shaw Pittman acted as legal adviser to SunExpress, Robert Wray to US Exim, Dentons to ING and BNP Paribas as lenders and agents, and Norton Rose Fulbright represented BNP Paribas as lessor.