BAE Systems Announces Agreement to Sell Regional Aircraft Fleet and Asset Management Business

BAE Systems announced today an agreement to sell its commercial aircraft lease portfolio and Asset Management business to investment affiliates of Fortress Investment Group LLC.

The sale, which is expected to close in the third quarter of 2011, is for a cash consideration of $187 million, subject to certain post-completion adjustments. Completion is conditional, amongst other things, upon regulatory approval.

The business, known as BAE Systems Asset Management, is the world’s second largest regional jet lessor by fleet value and the tenth largest aircraft lessor by fleet size. It has 16 lease customers in 11 countries. The business is responsible for the management of 151 commercial aircraft owned by BAE Systems, which are included within the sale, plus the management of third party owned commercial aircraft on behalf of airlines and investors.

The support and engineering activities of BAE Systems Regional Aircraft are not included in this sale.

Alan Fraser, Managing Director of BAE Systems Regional Aircraft said today, « We are pleased to confirm the sale of BAE Systems’ regional aircraft fleet and Asset Management business. We believe that this business will have a promising future and that we have found a buyer with the resources and expertise to support the growth of this activity.

« BAE Systems Regional Aircraft support and engineering businesses will continue to provide the full range of support to the new owner, including continuing airworthiness and engineering services. We are looking forward to continuing our close working relationship with the Asset Management business under its new ownership. »

Peter Briger, Co-Chairman of Fortress Investment Group and head of Fortress’s Credit business, said, « We believe that this will prove an outstanding investment for our Limited Partners, and anticipate that Regional Aircraft’s proven business model, and scalability that can support significant growth over time. »

In connection with the disposal of this business, BAE Systems has also entered into an agreement enabling the redemption of $514 million of the Series G Equipment Notes and Series B Equipment Notes issued under the Systems 2001 Asset Trust financing, a private placement of debt securities completed in 2001. This will be funded from BAE Systems’ available resources.

BAE Systems Asset Management was founded in 1993 to manage the portfolio of BAe 146/Avro RJ jetliners and the ATP and Jetstream turboprop airliners. Over the past 17 years to the end of 2010, the organisation has concluded more than 1800 lease, sale and other transactions, worth in excess of US$3.1 billion. The business is predominantly based in the UK and employs approximately 70 people.

Fortress is a leading global investment manager with approximately $43.1 billion in assets under management as of March 31, 2011. Fortress offers alternative and traditional investment products and was founded in 1998.

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