IPO- Contract Aviation Industries (AirWork/Alliance)

[Section28- BE]

Ex today's (Fri- 26 March 2010) AFR:

Street Talk

CAI’s $300m offering ready for take-off
PUBLISHED: 26 Mar 2010 01:07:52 PRINT EDITION: 26 Mar 2010

It’s not just the big investment banks reopening the market for initial public offerings. Just look at WilsonHTM and Commonwealth
Bank, the joint lead managers on the Contract Aviation Industries float.

The indicative range is between 10 times and 11 times fiscal year 2011 net profit, which gives a market capitalisation of about
$300 million. The investor roadshow winds up today and a fixed price will be decided on the weekend. The book-build starts on
Monday and the prospectus will be launched on Wednesday, March 31.

It’s interesting to note that CAI’s Alliance Airlines division just bought eight more Fokker-100 jets from a European vendor, due to
be delivered from May. The upside of this purchase has not been factored into forecasts.

The Australian Financial Review

[Section28- BE]

Ex The Australian Financial Review (Street Talk section)- 30 March 2010.

Street Talk

Move over locals, here comes Carlyle

PUBLISHED: 30 Mar 2010 01:05:33 PRINT EDITION: 30 Mar 2010
Edited by Jamie Freed and Sarah Thompson

In a clear sign that private equity is back with a vengeance, or that the initial public offering market needs to toughen up, US
behemoth, the Carlyle Group, has muscled in on the $300 million float of Contract Aviation Industries (CAI) from joint lead
managers, Commonwealth Bank of Australia and WilsonHTM.

As reported in Street Talk, Carlyle secured an exclusivity period of two weeks last Sunday night during which time the private
equity firm will need to decide on a bid and convince CAI to go unconditional.

This involves securing debt finance (Deutsche Bank is advising Carlyle on this point) and, while markets are still quite tight, the
offer for CAI was about $200 million, which is within the size for which a private equity firm could obtain funding.

Worth noting are rumblings that the institutions that bid in the float are on the war path, with some quarters suggesting they were
used as a stalking horse throughout the process.

Investors will remember that in the case of Flexigroup’s dual-track process, the IPO was outbid by trade and then the IPO came
back again.

However, in CAI’s case, the instos haven’t had a chance to rebid (yet).

The Australian Financial Review

[Red Jet]

Can someone please translate the article(s) above to English??:confused::confused::confused:

[crocodile redundee]

I think this is Financial Speak for "Let's talk this offering up bigtime so that the share price will rise"
As for me , I wouldn't touch it with a Barge Pole!!!!!!!

[IAW]

Well at least I now know what a stalking horse is.

Stalking horse - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Stalking_horse)

[TBM-Legend]

My broker told me tonight that the IPO document has been withdrawn due to "other offer" from trade..

[Beyond tha Threshold]

Carlyle offers $350m for Contract Aviation

From: The Australian June 01, 2010 12:00AM

US-based private equity firm Carlyle Group has signed a deal to buy Contract Aviation that values the company at up to $350 million.

Contract Aviation was expected to lodge an initial public offering prospectus in late March or early April, but pulled that plan after entering into talks with the Carlyle Group.

The creation of Contract Aviation Industries involves the merging of two companies, Alliance Airlines and Airwork Helicopters, both of which have independent investor Hugh Jones as a major shareholder.

The companies provide helicopter and aviation services to the government, military and resources sectors.

This deal comes as activity in the Australian private equity sector has been hotting up. Several US-based private equity players havebid for hospital operator Healthscope and South African private equity Aspen Pharmacare has been allowed to conduct due diligence for its bid for Sigma Pharmaceuticals.

International private equity investors are awaiting a critical decision from the Australian Tax Office about how private equity investments will be taxed here after the ATO issued a draft ruling saying private equity exits should be subject to income tax, rather than being treated as capital gains, which are not taxed for foreign investors if they come from countries that have tax treaties with Australia.

The ATO last week delayed its final ruling.

DOW JONES NEWSWIRES

Carlyle offers $350m for Contract Aviation | The Australian (http://www.theaustralian.com.au/business/carlyle-offers-350m-for-contract-aviation/story-e6frg8zx-1225873736541)

[Beyond tha Threshold]

Healthzone not looking so chipper now | smh.com.au (http://m.smh.com.au/business/healthzone-not-looking-so-chipper-now-20111124-1nwx2.html)

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

[Cactusjack]

Interesting timing indeed. But the reality is that even though Scotty and co will now be able to bring forth their retirement plans effective immediately, airline investing is a dud. Although completely different structures to Alliance Virgin and Qantas shares are nowhere near what they were floated at. Airlines are one of the highest risk/poorest return investments going.

The resource sector is what helps airlines like Alliance thrive at the moment, but how can anybody predict the next 12 to 36 months? The economy is on a knifes edge albeit the resource sector, China is slowing and the worlds economies are collapsing. I have seen this all before and reckon that airline investing for mum and dad investors is just like the toffee coated turd, once you lick the top layer of toffee off it is just shisen underneath!

[neville_nobody]

I have seen this all before and reckon that airline investing for mum and dad investors is just like the toffee coated turd

Often this is because airlines are not run as a airline business but as a way of spinning money. At least here the owners still have a stake in the airline.

[IAW]

Alliance Aviation Services IPO finally takes off | The Australian (http://www.theaustralian.com.au/business/wall-street-journal/alliance-aviation-services-ipo-finally-takes-off/story-fnay3vxj-1226211911938)

[airdualbleedfault]

8 more A/C for Alliance and 10 for Network, that's 18 x 100 seat jets, is there really that much work around ?

[Monopole]

8 more A/C for Alliance and 10 for Network, that's 18 x 100 seat jets, is there really that much work around ?

Everybody over here keeps saying that there is plenty of "work around". That if you had the seats, they would be filled.

As for the 8 and 10 aircraft, I think that Alliance has already gotten the 8 quoted in above posts (and not all of them have/will go to Perth), so that is not an additional 8 of what is on register now, and I believe that Network have cut their 10 aircraft down to 5.

[airdualbleedfault]

Thanks Monopole, but I believe you may be incorrect on the Network thing ;)

[cynphil]

Network still 10 aircraft, 5 F100 and 5 B738's (from Qf order to get RNP approved aircraft..mines are demanding!)

[IAW]

Fokker100 with GNSS mod can do RNP 0.3 . I thought it was ADS-B the mining customers wanted?

[kimberleyEx]

HI All.

Clarifying what IAW wrote. That is correct. Fokker 100 GNSS mod will do RNP 0.3. But it is been approved for RNP LNAV only ops. Think Fokker services are going for LNAV/ Baro VNAV once that first approval is granted.

Also the system is not approved yet. All F100's operating at the moment are not fitted with GNSS for navigation. The Alliance machines have a stand alone system for RNP LNAV approach.

I believe XR and Alliance now have some ADS-B capable machines, which goes part way toward the approval status of the integrated system. However for Navigation, it is yet to be flight tested.

Cynpil: Network still 10 aircraft, 5 F100 and 5 B738's (from Qf order to get RNP approved aircraft..mines are demanding!)

Just wondering reference the 738. Isnt that contradictory to what Alan Joyce got Network for? Typically a/c on FIFO ops are low utilisation machines. A new B738 needs to be worked to make $$ back, wouldnt they be getting retired B737 classics?

Regards.

K-Ex.

[breakfastburrito]

Network still 10 aircraft, 5 F100 and 5 B738's (from Qf order to get RNP approved aircraft..mines are demanding!)
I don't believe the classics have been upgraded to do RNP.

[cynphil]

FIFO... low utilization!!! Just look at the Qf KA operation...it is far from low utilization...Qf Perth 737 base not expanding anymore since Joyce bought Network...!! (even transfered 3 F/O's from Per to Bne without replacing them!) They will probably take over some of Qf's W.A & Qld FIFO operations and should be able to get good use out of the 737NG's. ADSB is good but the Qf NG's have up to .1nm Rnp for approach capability. The mines are demanding this latest technology to change over their workforce so as not to affect their production!

[R.Cruizo]

Network crews operating the B737 NG's ! I bet the QF boys and girls will love that.

[kimberleyEx]

Hi Cynphil.

Sorry I should of been more specific. Typically in FIFO. I was referring more to the charter side. Not RPT. As this thread was about Alliance and their competitors. These companies (including Network) specialise in Charter services for mining companies. An example of this is Network with Nifty or Alliance with Telfer. The jet does a service in the morning. Then again in the afternoon. Sometimes only one service a day. That is what I meant by low utilization. Also it is why a/c like the F100 and 146 still operate. If a higher utilization were required, a more modern jet like the B738 would make more sense as the more it flies the more $$ it makes. Two services a day wouldn't make a new jet as cost effective as a older type. Referencing the 737 classic. Low utilization with it since it is been phased out by Qf, flicking it off to Network was a rumour that had been floating about.

Also with ADS-B it isn't designed as a approach aid. Where you stated it was good, but 738 does RNP 0.1. ADS-B is a broadcast of a/c position, used by ATC in non radar environments. RNP is a statement of a/c position. Yes you are correct they can do 0.1. Just that statement didn't make sense.

Cheers again.

K-Ex.

[cynphil]

G'Day kimberleyEx,
Yes that statement does not make sense...what I should have said is the ADSB is great for ATC awareness of where everybody is, not for approaches. This is why the mines are asking for aircraft with RNP-AR approval....which the Qf 738's have. It is another tool (Network) that Joyce can use against QF shorthaul next year when they are up for a new eba!!
Cheers, Cynphil

[breakfastburrito]

The Network Aviation EBA (http://www.fwa.gov.au/documents/agreements/wpa/CAEN084663945.pdf) has had the had the pay rates removed. Why the secret?

[Skystar320]

Not 738's but I hear there are some white / surplus 734's available...