Private Plane Service VistaJet Pays Up For Debt As Plunging Stocks Stoke Growth Fears
Summary
But the link between economic prosperity and luxury travel is among the factors that forced a charter plane company to pay more than it expected for debt funding this week. VistaJet, founded in 2004 by Swiss billionaire Thomas Flohr as a private aircraft subscription service for corporate executives and wealthy individuals, sold $550 million of senior unsecured bonds today to refinance some of its existing debt, after a week-long marketing process. When commodity prices bottomed in 2016, fears that key clients like Middle Eastern oil investors would cancel their subscriptions were among the factors that tipped the company into financial distress, leading its bonds to trade at just 30 cents on the dollar, as Debtwire reported at the time. The XOJET deal in particular is expected to boost earnings—it provided more than a third of Vista’s total revenue last year—although some observers cautioned that on-demand flight sales would be less reliable in a downturn than subscriptions, where members are locked into three-year contracts. Because the aircraft debt is senior in the capital structure and would prevent holders of the new bonds from seizing Vista’s assets, ratings agency S&P estimated their potential recovery value in a default at just 5%.