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11 May 2007

Acquisition of Pegasus Aviation Finance

Terra Firma, the European private equity group, announces the acquisition of Pegasus Aviation Finance Company (Pegasus) by Terra Firma's aircraft leasing platform, AWAS. Pegasus has been acquired from investment funds managed by Oaktree Capital Management, LLC and the Pegasus senior management. JP Morgan acted as sole financial advisor to Terra Firma on the transaction.

Headquartered in San Francisco, Pegasus is one of the world's leading capital providers to airlines for new deliveries and fleet management solutions. Since 2004, Pegasus, led by CEO Richard S. Wiley, has built a business of 82 owned aircraft, 94 managed aircraft, and a pipeline of 37 aircraft on forward orders. The pipeline includes the latest new-technology and fuel efficient narrowbody and widebody aircraft such as the Boeing 787 Dreamliner, delivering in 2009. The aggregate appraised value of Pegasus' owned fleet and forward order pipeline is over $5 billion.

Headquartered in Dublin, Ireland, AWAS was acquired by Terra Firma in March 2006 and currently leases 134 aircraft to 72 airlines across the world. The company has been positioned to be Terra Firma's growth platform in the sector, and as a result of this transaction, the combination of Pegasus and AWAS will create the world's third-largest aircraft lessor.

Guy Hands, Chief Executive of Terra Firma, said:

"The purchase of Pegasus builds on our initial AWAS acquisition, and will significantly strengthen our worldwide position within the aircraft leasing sector, by broadening our customer and supplier base. The acquisition will allow the combined company to take advantage of significant benefits from increased scale as well as to capitalize further on the attractive outlook for the sector."

Franklin Pray, Chief Executive of AWAS, said:

"The combined fleet will comprise more than 250 owned and forward order pipeline aircraft valued at over $7.5 billion and 94 managed aircraft, leased to over 120 customers worldwide. We will be able to provide our customers with attractive aircraft finance and asset management solutions. Together, we aim to be a major generator of growth in the global aircraft leasing business for Terra Firma."

Merrill Lynch acted as financial advisor to Pegasus and Paul Weiss Rifkind, Wharton & Garrison acted as legal counsel to Pegasus. Clifford Chance acted as legal advisor to AWAS and KPMG as accounting advisor to AWAS.

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