XOJET’s incoming sponsor, Rhone Capital, has upsized the equity contribution backing its buyout of the charter flight provider, after a more than a month of syndication weighed down by structural subordination concerns, said two sources following the deal. As such, lead arranger JPMorgan this morning unveiled revised terms including a downsized loan and wider pricing, said the sources and an additional source.

Rhone is acquiring XOJET via its holding company Vista Global, which also owns premium global flight services provider VistaJet. For its part, the much larger VistaJet recently reported positive 3Q18 earnings featuring year-over-year growth in both revenue and EBITDA.

JPM is now marketing a three-year USD 210m TLB for XOJET, down from a five-year USD 280m loan at its 18 October bank meeting. Price talk is Libor+ 575bps with a deeply discounted 91-93 OID, compared to L+ 475bps at 99.5 originally. Commitments are now due tomorrow (4 December) at 3pm ET.

The structural changes bring leverage at the XOJET entity to 3.5x, compared to around 4.9x initially, given its roughly USD 57m in LTM EBITDA, sources said. XOJET has smaller scale compared to VistaJet, with the latter comprising about 85% of pro forma combined EBITDA, according to a 17 October Standard & Poor’s report.

The XOJET financing is non-recourse to the other Vista Global businesses, according to Vista’s press release announcing the deal.

Meanwhile, the XOJET term loan has a weak claim on collateral, despite its senior secured status, since all of the company’s aircrafts are first pledged to securitized aircraft financing debt, several of the sources pointed out. On a combined basis, XOJET and VistaJet will have USD 1.47bn in ABS debt, as reported.

“In the event of a bankruptcy, the holders of aircraft debt would claim the assets, and then the loan would just recoup the equity in the company, which would be worthless,” one of the sources said.

On the VistaJet side, VistaJet booked USD 173m in 3Q18 revenue, up 17.5% year-over-year, and USD 64m in EBITDA, up 6.7%, two additional sources said. VistaJet is levered at 7.2x based on USD 243m of LTM EBITDA and USD 1.74bn of total debt.

VistaJet’s ‘B-’ rated USD 300m 7.75% unsecured notes due 2020 last traded in size on 19 November at 100.25 to yield 7.252%, down slightly from 100.875 on 30 October, according to MarketAxess.

S&P analysts said in the 17 October report that they “expect VistaJet will continue to drive the group’s profitability assessment and support the business profile.” XOJET’s loan was initially rated B2/B, but the agencies haven’t weighed in yet post-downsizing.

Vista Global and Rhone did not respond to requests for comment. JPMorgan declined comment.

2018 Debtwire