Transaction Documentsand Process

Fiona LeungDirector, Transaction Management

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Overview

Lessor Operating platforms – participants in the transaction process

Internal Controls and Approvals – what are the typical steps to approve and close a deal

Documenting a transaction – LOI vs lease negotiations

Lease management – roles and interfaces within the company

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Department Core functions and responsibilities

Commercial New business Relationships with airline clients and manufacturers End of lease remarketing programmes Debt and equity funding Relationships with capital providers End of lease refinancing Due diligence on potential lessees, Periodic reviews on lessees Counterparty and Asset ratings Management of Investment Committee and Board Approval processes Technical input to transaction negotiation Deliveries, transitions, technical data and inspections Relationship with manufacturers, lessee technical and maintenance providers Structuring, negotiation, documentation and closing Post-closing portfolio management Relationships with lessees, capital providers and legal advisors Regulatory compliance and reporting Financial modelling, statutory and management reporting Treasury / Financial planning and forecasting/ Tax Structuring Corporate Governance and Company Secretarial Human Resources Business Information Systems and ICT

Capital Markets

Risk Management

Technical

Transaction

ManagementFinance, Treasuryand Tax

[Operations]

Lessor Operating Platform

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Controls and Approvals

Deal investment process – from origination to lease management

What type of Deals? - Lessor Platform Strategy- Leasing, Sale and Lease-backs (or “SLBs”)- Aircraft Trading (portfolio acquisitions and aircraft sales)- Manufacturer Orders

Controls and Approvals- Commercial Committee- Investment Committee- Board Approval- Transaction Approval Committee

Portfolio / Transaction Management

Origination and

assessment

Commercial

Committee

Letter of Intent

Due diligence

Investment

Committee/ Board

Documents

Transaction Approval Committe

e

Funding and

delivery

Management

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Negotiation Point Teams involved Asset and Lessee Senior management, Commercial

Lease term Commercial, Capital Markets, Treasury

Rent Commercial, Capital Markets, Treasury

Maintenance Reserves Cash or Letter of Credit PBH agreement

Technical, Commercial

Security Deposit Commercial, Risk Management

Structure and registration Transaction Management, Tax

Return conditions Technical, Commercial

Insurance Commercial, Risk Management

PDP Financing Commercial, Capital Markets, Treasury

Negotiating the LOI

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Negotiation Point Teams involved Subleasing Transaction Management, Risk Management

Engine pooling Transaction Management, Technical

Events of default • Transaction Management, external counsel

Default interest rate Transaction Management, Treasury

Covenants Transaction Management

Indemnities Transaction Management, external counsel

Conditions precedent Transaction Management, local external counsel

Insurance Transaction Management, insurance advisor

Lease assignment Transaction Management

Governing law and forum Transaction Management, local external counsel

Negotiating the Lease

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Managing the Lease Cycle

Lease Management

Pre-Delivery

Inspection of Aircraft and the Records and Check Maintenance Program

Lease Term

Acceptance and Delivery

Physical Inspection Rent and MR invoicingCheck Utilization

Maintenance Status Reports Physical Inspections, Lease

Management, Risk Management and Insurance

Start Remarketing (9-18) months

If No Lease Extension - Acceptance and Redelivery

Physical Inspection Compliance with Lease

Return Conditions Calculate Return Compensation

Storage/Insurance (if needed)

Selling or Releasing Aircraft

Transition

End of Lease Term