AvAir Closes US$170m Revolving Credit Facilities with Six Banks

US aviation aftermarket specialist AvAir has closed US$170m in new revolving credit facilities with six banks, providing additional capacity to finance aircraft-parts inventory, working capital and acquisitions.

The financing involves HSBC Bank USA, Crédit Agricole Corporate and Investment Bank, First Citizens Bank, Western Alliance Bank, Flagstar Bank and Sunflower Bank.

AvAir said the facilities would support inventory purchases, general corporate requirements and the expansion of its aircraft aftermarket operations.

The transaction is particularly relevant to inventory finance because aircraft components can tie up substantial capital between acquisition, storage and eventual sale or exchange.

Unlike businesses selling quickly moving consumer goods, aviation aftermarket suppliers may hold specialist components until an airline or maintenance provider requires a particular part. The value of that stock depends on technical condition, certification, aircraft demand and the market for the underlying component.

Revolving credit allows a distributor to replenish and expand inventory without arranging a separate term loan for every purchase. The disclosed facilities could therefore support AvAir’s ability to respond to opportunities to acquire parts inventories and supply customers across different markets.

AvAir did not disclose the pricing, maturities, individual bank commitments or collateral arrangements. It would consequently be premature to characterise the financing as a conventional inventory-backed borrowing-base facility.

The closing follows the company’s acquisition of Full Stop Technics, a Milwaukee-based provider of certified aircraft wheel and brake repair services.

That acquisition added maintenance, repair and overhaul capabilities to AvAir’s existing distribution business and expanded its ability to support the exchange and servicing of components.

AvAir serves airlines, original equipment manufacturers and maintenance organisations through activities including the sale, exchange, leasing and consignment of aircraft parts.

The company’s chief financial officer, Bob Knox, said the backing of six institutions would provide flexibility to pursue strategic opportunities.

For the lenders, the transaction provides exposure to a specialist aviation supply chain in which access to suitable components and the ability to finance inventory are important commercial capabilities.

The financing also demonstrates how working-capital facilities can support both organic expansion and acquisitions, without requiring a company to rely entirely on longer-term acquisition debt or internal cash generation.

AvAir has confirmed that the facilities closed, but it has not disclosed how much of the available financing has been drawn.