Overview
A five-year senior secured loan was provided to a UK-based aviation services business operating across defense, security, engineering, events, and disaster response. The company runs four segments—Capability Development, Special Missions, Charter, and large aircraft MRO—and operates from two UK bases. The loan refinanced existing debt to simplify the company’s financial structure.
Investment Details
- Senior secured loan, 7.0% cash interest + 6.5% PIK, 0.5% upfront fees, five-year term with a three-year non-call period
- Secured against all material assets, inter-company loans, working capital, and share pledges
- Covenants: interest coverage, maximum leverage (4.5x → 2.75x), minimum liquidity, minimum contracted revenue, and cash-sweep mechanism
- Founders personally guarantee the loan in certain adverse scenarios
Investment Rationale
- Long-term, profitable contracts: High visibility on renewals with substantial switching costs
- Strong cashflow generation: Minimal ongoing capex, ~60% EBITDA-to-FCF conversion
- Deleveraging profile: Excess cashflow sweeps reduce residual capital at risk
- Value protection: Cashflow fully retained within the operating group; no shareholder distributions permitted
- Proven track record: Agile operations with strong client relationships and contract execution
Reading Signals.
Finding Value.
