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Float takes wing
SCOTT McMillan's $200 million float of his Alliance Aviation Services has taken wing, at least in terms of marketing among the stockbroking community and their clients.
The selling point on Alliance is that it is not a passenger airline, but the aerial equivalent of a mining contractor because 75 per cent of its business is servicing the ''fly in, fly out'' requirements of major minerals groups around the country.
Presentation documents seen by Insider have Alliance forecasting earnings before interest, tax, depreciation and amortisation of $47.7 million, a 27 per cent gain over 2011's numbers of $37.5 million.
The return it is quoting on its fleet of 25 mostly Fokker craft is something that will make Qantas boss Alan Joyce cry. It reckons it can generate an EBITDA per plane of $2.4 million - compared with the $7.3 million spent over two years to buy and refurbish one Fokker.
The Alliance Aviation structure was only incorporated last month to incorporate all the bits and pieces of what was Alliance Airlines group.
The deal structure is a raising of about $34 million via new share issues, and between $73 million and $86 million from the sell down of half the stakes of its five founder investors, including McMillan. Because the business has been sold into the new public company, the cash raised from the sell down can be termed as repayment for purchase of assets.
The best news for potential investors is that the founder investors are hanging around with about 40 per cent of the equity, rather than heading for the Caymans with their booty.
Credit Suisse is running the book for the offer, which is being pitched at between $2 and $2.30 a share, and reckons it can provide a dividend yield of about 5 per cent next year.
IAN MCILWRAITH November 25, 2011