AAR Proposes Two Note Series That Total $1.915 Billion for MRO Deal

AAR proposed two senior-note series to help finance its acquisition of a controlling interest in MRO Holdings, with the proposed amounts totaling $1.915 billion by calculation. The offering is subject to market conditions and other factors, and the notes would mature in 2031 and 2034.

The proposed offering includes $955 million of notes due in 2031 and $960 million due in 2034. AAR announced the plan Nov. 2. AAR would sell the notes in transactions exempt from registration to institutional buyers eligible under Rule 144A and certain non-U.S. purchasers in offshore transactions under Regulation S.

The financing package would also draw on AAR’s revolving-credit facility and a separate sale of 2,215,791 common shares announced earlier. The money would help cover the acquisition’s cash consideration, refinance MRO Holdings’ existing credit-agreement debt through an intercompany loan, pay transaction expenses and support working capital and other general corporate purposes.

AAR’s preliminary pro forma calculations used rates of 6.50% on the 2031 series and 6.75% on the 2034 series. These are assumptions for the pro forma, not confirmed final rates. AAR’s final principal amounts, maturities and interest rates may differ.

The transaction implies a $4 billion enterprise value for MRO Holdings and would give AAR a 65% controlling stake. The deal includes an estimated cash purchase price of $1.819 billion, subject to customary adjustments, and AAR preferred stock valued at $780.8 million. AAR also plans to repay about $1.3 billion of MRO Holdings’ existing borrowings. The acquisition is expected to close in AAR’s fiscal third quarter ending February 2027, subject to regulatory approvals and customary closing conditions.

If the offering closes before the acquisition, proceeds after initial purchasers’ discounts and commissions would be held in escrow. Failure to meet the applicable escrow conditions would trigger special mandatory redemption of that series at its initial issue price, plus accrued and unpaid interest. Those escrow and redemption provisions would not apply if the offering closes substantially concurrently with the acquisition.