ABS Jets chooses bonds to support expansion
ABS Jets made a series of announcements in 2011 about its planned expansion in Eastern Europe, including and advertising campaign entitled 'Everyone can own a business jet. The company has chosen to issue a corporate bond rather than seek a bank loan for its investment.
According to ABS Jets, “Everyone can own a business jet.” This was
the title of a marketing campaign that ABS Jets rolled out in the Czech
Republic and Slovakia in September.
The Prague operator plans to be there when people start flying
those jets and is opening subsidiaries in Kiev and Sofia in 2012. Third party
maintenance services are also due to start at its Bratislava location this
month.
In September 2011 the company opened a newly-built ‘Hangar N’, its
fourth at Prague Ruzyne Airport Terminal 3, its main operations base. It funded
the hangar by issuing a CZK 450 million ($23 million) five-year corporate bond.
The bond pays 6.5% interest until maturity in 2016 and is listed on the Prague
Stock Exchange.
“We are running several projects for the growth of ABS
Jets and the bonds ensure the necessary capital for investing in our projects
and to keep on with the company development,” said Vladimir Petak, CEO of ABS
Jets. “There
is a demand for our services, reflected in the fact that 70% of the new ABS
Jets Hangar N capacity had been already sold before the opening in September,”
he adds.
The bond issue is a new source of funding for ABS Jets
which has used bank loans for other projects.
“Bonds
ensure less costly financing, and also mean we are not bound by covenants and
other limiting conditions which come with loan contracts,” says Petak, “It took
us about a year to decide on the bond issue followed by three months of intensive
work from the project team.”
Petak said
he was happy with the bond issue and that the company is likely to issue again.
He also
stressed that this would not be the end of the investment in ABS Jets. “We work constantly on the
development project. The construction of Hangar N has been very successful, and
we are now We still plan to build another hangar for our fleet -we would like
to add to our hangars in Prague with at least one hangar in Slovakia, which is
where a significant part of our fleet is based.”
ABS Jets operates five Embraer Legacy 600 aircraft – one of Europe’s
largest fleets of the aircraft – and is an Embraer authorised service centre
and sales representative. It is primarily an aircraft management company, but
offers other services including executive handling, maintenance, flight
planning, and charter and brokerage. It
The company is owned by three foreign entities: majority
shareholder Arthur, Bradley & Smith, a UK-based investment firm;
Cyprus-registered investment firm Bridgehill Limited; and J&T Bank
(Switzerland), which also has branches in the Czech Republic and Slovakia.
