A cross border team from global legal practice Norton Rose Fulbright has advised Emirates on a US$913 million Sukuk, marking a world first for utilising a UK Export Finance (UKEF) backed Sukuk for an aircraft financing, the first time that a Sukuk has been used to pre-fund the acquisition of aircraft and the first ever Sukuk financing for A380 aircraft. The proceeds from the issuance of the Certificates will be used to fund the acquisition of four Airbus A380-800 aircraft, which are expected to be delivered in April, May, June and July 2015. The aircraft will be leased to and operated by Emirates.
The US$913,026,000 Certificates due 2025 (the “Certificates”) were issued by Khadrawy Limited and have the benefit of a guarantee by Her Britannic Majesty’s Secretary of State acting by the Export Credits Guarantee Department of the UK Government (currently operating as UK Export Finance) (“ECGD” or “UKEF”) (the “ECGD Guarantee”).
The Certificates, which have a tenor of 10 years, are to be issued pursuant to Regulation S and Rule 144A under the United States Securities Act of 1933. They were priced on 25 March 2015 at a profit rate of 2.471% (90 basis points over the interpolated mid swap rate). The Certificates saw strong demand from global investors, attracting orders exceeding US$3.2 billion and recording an oversubscription of 3.6 times.
Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan Securities plc and National Bank of Abu Dhabi P.J.S.C. acted as Joint Structuring Agents and Joint Lead Managers; Abu Dhabi Islamic Bank P.J.S.C., Dubai Islamic Bank, Emirates NBD Capital Limited and Standard Chartered Bank acted as Joint Lead Managers and NCB Capital Company acted as Co-Lead Manager.
Mohammed Paracha, partner and Head of Islamic finance, Middle East and Africa at Norton Rose Fulbright in Dubai commented: “Norton Rose Fulbright’s Islamic finance team is proud to have worked on such a cutting-edge transaction. The industry has been seeking new and innovative structures that make Islamic financing techniques available to a wider audience and this transaction is evidence of that. The Sukuk builds on the reputation London already has as a key hub for Islamic finance and also underlines Dubai’s efforts to become the capital of the global Islamic economy.”
Sean Corrigan, aviation finance partner in the New York office of Norton Rose Fulbright commented: “The aviation industry is increasingly looking at new and innovative forms of financing in response to growing demand for air travel worldwide. This is a pioneering transaction and one that we are delighted to be involved in. It also demonstrates our ability to field a truly global aviation team to advise on a highly structured financing.”
Gregory Man, debt capital markets partner at Norton Rose Fulbright in Dubai commented: “We are pleased to have been involved in this ground-breaking transaction for such a regionally important client. This is the first time that a Sukuk has been used to pre-fund the acquisition of aircraft and the complex structuring used to achieve this showcases our involvement in the development of and innovation in the Sukuk industry. Our ability to execute this innovative transaction locally is also a testament to the growing strength of our debt capital markets practice in the region.”
The Norton Rose Fulbright team was co-led by partners Mohammed Paracha and Gregory Man in Dubai and partner Sean Corrigan in New York assisted by senior associate Nicholas Robinson (Dubai) and associates Tom Burke and David Tan (Dubai). Partners Roy Goldman and David Gillespie (New York) and Stephanie Schroepfer (Houston) advised on US Securities and US tax issues assisted by senior associates Kelli Sallemi (New York) and Jennifer Morgan (Los Angeles). Partner Emma Giddings (London) provided assistance on export credit issues.
Clifford Chance advised the Managers and Citibank as Delegate, ECA Security Trustee and ECA Facility Agent. Allen & Overy and Hogan Lovells advised ECGD.
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