K&L Gates Assists JP Lease Products & Services on JOLCO Financing of Three Aircraft

20 Juli 2022

CharlestonK&L Gates recently assisted JP Lease Products & Services in closing a Japanese Operating Lease with Call Option (JOLCO) financing of three Airbus A320 aircraft with ICBC Financial Leasing as Intermediate Lessee. This was the first JOLCO of its kind in the U.S. market, with the deal structured by K&L Gates and Gilchrist Aviation (acting as FAA Counsel) utilizing the U.S. Owner Trust structure.

With an aggregate loan facility amount of US$112 million and a 10- to 11-year tenor, the financing follows ICBC’s initial acquisition of the three aircraft from JLPS Ireland in December 2021. The transaction involved a sale and leaseback from ICBC (as beneficial owner) and Bank of Utah (as legal owner) to the Japanese SPC and then back to ICBC and BOU under the JOLCO Head Lease.

Two of the aircraft are on lease to Frontier Airlines and the third to Spirit Airlines. The K&L Gates team that advised JP Lease Products & Services was led by Charleston and New York partner Amanda Darling, with assistance from associate Max Griffin (London) and paralegal Kat Wilcox (Charleston).

Darling commented: “It’s exciting to be pioneering a new JOLCO structure and in particular within the U.S. market. Until relatively recently, the United States wasn’t an attractive option for many Japanese JOLCO investors, but we are witnessing a shift firsthand and this Intermediate Lessee JOLCO with ICBC is evidence that there are multiple JOLCO structures which are workable in the United States.”

“JLPS Group Corporate Finance expresses their thanks and appreciations to K&L Gates and related partners to make this two-step, three-continent JOLCO transaction a success amid uncertainties due to persisting COVID threats and the Ukraine crisis,” said Frederic Mireur, head of corporate finance of the JLPS Group. “Congratulations to Amanda and her team in particular for their constant solution-driven hard work and long night sessions due to the time zone differences between Japan, Europe, and the United States since last September.”