Investments Update
As detailed in our Quarterly Update dated 17 January 2013, two key realisations being pursued by
Keybridge are our mezzanine loans secured by four Airbus A330-300 aircraft managed by our finance
partner, GMT Global Republic Aviation Limited ("GMT").
Aviation
The Company is pleased to advise that following joint meetings in Europe recently, GMT has now
signed a non-binding Letter of Intent ("LOI") with a leasing company subsidiary of a major financial
institution to sell three A330-300 aircraft, which are currently on lease to a European airline. This LOI
is subject to the satisfaction of usual conditions precedent and due diligence, as well as board and
investment committee approvals by both seller, seller's financiers and purchaser, with the sale is
expected to be completed by no later than 29 March 2013.
Assuming the transaction completes on the terms contained in the LOI, net proceeds flowing to
Keybridge from this sale are expected to be approximately USD30 million.
The Company also advises that the sale of the fourth A330-300 aircraft, now recently returned off
lease as scheduled, is expected to be completed shortly, with estimated net cash proceeds to
Keybridge of approximately USD2.6 million.
These realisations are in line with our expectations of a book loss of between 10-12% of our 30 June
2012 carrying values as advised in our last Quarterly Update. It should be noted that the gross sale
value of these four aircraft totals approximately USD100 million (once accounting for asset level debt),
meaning that the discount taken to deliver a debt free outcome for the Company represents a
discount of approximately 3-4% on gross sale value.
Property
One of the Company's remaining property transactions is a mezzanine loan to a securitisation
warehouse backed by a pool of first ranking commercial property mortgages, some performing and
some not. The Company's carrying value of this asset as at 30 June 2012 was $5.5 million.
Following a recent successful early refinancing for one of the pool's underlying performing loans
(which refinancing was initiated by Keybridge), the senior note holder to this warehouse has now
been repaid in full, with Keybridge also receiving a principal repayment of $0.467 million in January
reducing its carrying value to $5.03 million. Keybridge is consequently now the sole lender to this
loan pool, and in addition to now being entitled to monthly distributions of interest and principal
repayments on the performing loans, will be taking a far more active management role across this
portfolio.
Lending
Keybridge has previously advised that its mezzanine loan to an Australian car leasing business, now
extended to 28 February 2013, was expected to be repaid by its borrower by its maturity date
following the sale of its leasing business to a major international purchaser. Keybridge has now been
advised that the purchaser wishes to amend the terms of its offer, which will require further
negotiations and agreement between Keybridge, its borrower and the purchaser over the next two
weeks. If the amended terms are agreed by all parties, and if the transaction is then approved by the
purchaser, the sale will not complete by the current loan maturity, and accordingly the borrower has
formally sought a further term extension. The terms of this extension request are yet to be agreed.
Keybridge is not relying on the repayment of this loan for any of its own lending milestones.
Debt Facility
The outstanding principal amount under Keybridge's corporate debt facility today stands at USD26.3
million. The Company must reduce this outstanding amount by a further USD1.3 million by 28
February 2013, and as Keybridge has existing cash reserves of USD1.5 million, is able to meet this
milestone in accordance with its terms, if not before.
On completion of the first aircraft sale, Keybridge's debt will be reduced to USD23.6 million and cash
reserves will be retained at circa USD1.5 million. Provided the other material aviation sale concludes
in late March as expected, the corporate facility will be repaid in full, and the Company will have cash
reserves in excess of USD7.5 million.
Keybridge Capital is a financial services company that has invested in, or lent to, transactions, which
predominantly are in the core asset classes of property, aviation, finance receivables, shipping, and
infrastructure.
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