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Monocle Acquisition and AerSale Revise Merger Agreement
Friday 11 September 2020

US-based public investment vehicle Monocle Acquisition Corp. (NASDAQ: MNCL) and US-based aviation aftermarket products and services company AerSale Corp have entered into a revised agreement to merge in a transaction with a fully diluted enterprise value of approximately USD 300m, equating to approximately 5.5x AerSale's forecasted 2021 Adjusted EBITDA, the companies said.

The combined company will be named AerSale Corp. and is expected to be publicly traded on the NASDAQ Stock Market. The parties anticipate closing the transaction early in 4Q20, after receipt of shareholder approval.

The revised merger agreement is supported by AerSale's current owners Leonard Green and Partners, Florida Growth Fund LLC and the company's two founders and was unanimously approved by the boards of directors of both Monocle and AerSale.

The transaction will be funded by a combination of cash held in Monocle's trust account and common stock in the surviving company to be issued to existing AerSale shareholders.

AerSale will retain the first USD 50m of cash proceeds from Monocle's trust account and 40% of all trust proceeds in excess of USD 50m.

As a result of this new structure, AerSale will be debt-free at close. Further, assuming no redemptions from the trust account, it is anticipated that AerSale will have approximately USD 128m of cash on its balance sheet and USD 110m of additional liquidity available under its existing asset backed debt financing facility.

Following completion of the transaction, the current owners will receive approximately USD76 m in cash and USD 241m in newly issued common equity, representing approximately 56% of the outstanding shares of the combined company, assuming no redemptions by Monocle's existing public shareholders.

The current owners will also have the right to receive 3m shares of contingent consideration depending upon the achievement of certain stock price performance targets.

AerSale's current owners can elect to receive all of their transaction consideration in the form of common equity in the surviving company, in which case the cash consideration will be divided pro rata by the non-electing owners, if any, or if all of AerSale's current owners make such election, the cash consideration will be paid to the surviving company.

Those who elect to receive their transaction consideration in the form of common equity will receive additional shares of common equity at closing, and will also have the right to receive additional shares of contingent consideration depending on the achievement of certain stock price performance targets.

The remaining outstanding shares of the combined company will be held by public stockholders and the founders of Monocle.

On a pro forma basis, AerSale expects to generate approximately USD307 m in revenue and a 17.6% Adjusted EBITDA margin for the full year 2021.

The revised transaction structure was created to maximize AerSale's ability to succeed in the current environment, providing a strong, debt-free balance sheet with substantial available liquidity. Monocle believes the revised transaction presents a compelling opportunity for investors representing the best public company opportunity to benefit from the recovery in the commercial aviation market.

AerSale Corp specialises in the sale, lease, and exchange of used aircraft, engines, and components, in addition to providing a broad range of maintenance, repair, and overhaul and engineering services for commercial aircraft and components.

AerSale also offers asset management services to owners of end-of-life aircraft and engine portfolios.

AerSale is a global supplier of aftermarket aircraft, spare engines, flight equipment, maintenance, repair and overhaul services, and used serviceable material support.

The company also provides a broad range of internally engineered proprietary repairs, products, modifications, upgrades, and other cost-saving technical solutions.

AerSale focuses on commercial aircraft and engines from their mid-life phase of operating service through asset retirement.

By utilising its highly integrated suite of asset management, maintenance and monetising services, AerSale is able to realise the highest value of mid-life flight equipment investments, while also maximizing the value, reliability, performance and safety of customers' aircraft and engines worldwide.

Headquartered in Coral Gables, Florida and with strategically located operating facilities, AerSale serves a growing global customer base.
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Date Published: 11/09/2020

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