SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 10, 2018
The Carlyle Group L.P.
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction
1001 Pennsylvania Avenue, NW
|(Address of principal executive offices)||(Zip Code)|
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
7.01 Regulation FD Disclosure.
On October 15, 2018, The Carlyle Group L.P. (we, our or us) issued a press release announcing the transaction described below under Item 8.01 of this Current Report on Form 8-K. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K, including the press release attached hereto as Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, such information shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
8.01 Other Events.
On October 10, 2018, we, acting through one of our subsidiaries, entered into a securities purchase agreement with H&K AAG Holdings LLC (the Seller), William D. Hoffman and Robert G Korn (together, the Founders), pursuant to which we have agreed to acquire Apollo Aviation Group (AAG) from Seller. All of the equity interests in Seller are indirectly owned by the Founders and their affiliates. The transaction is expected to close no later than January 31, 2019. At closing, AAG will become a new business line within Carlyles Global Credit segment.
Established in 2002, AAG is a Miami, Florida-based multi-strategy investment manager that is engaged in commercial aviation aircraft financing and investment and providing investment management services related to the commercial aviation industry. AAG has $5.6 billion in assets under management with an investor base that is predominantly institutional, including public and private pension funds, family offices and endowments. In connection with the acquisition of AAG, we, acting through one of our subsidiaries, have entered into employment agreements with the Founders to provide expertise in commercial aviation aircraft financing and investment and investment management services related to the commercial aviation industry.
Pursuant to the securities purchase agreement, we will acquire 100% of the equity interests in AAG, which will entitle us to 100% of the management fee-related revenues, performance fee-related revenues and advisory fee-related revenues of AAG and its subsidiaries that serve as advisors or servicers of AAGs funds and portfolios of investments; provided that, while the Founders are employed by us or our subsidiaries and for a fixed period of time thereafter, we will receive 55% of the carried interest on capital invested in funds managed or advised by AAG and its subsidiaries, with the remaining 45% being allocated to the Seller and certain employees and service providers. In consideration for acquiring 100% of the equity interests in AAG, we have agreed to pay to the Seller (i) at the closing of the acquisition, subject to customary adjustments for cash, debt, working capital and transaction expenses, $75 million in cash and (ii) subject to AAG achieving certain performance targets during 2020 through 2025, up to $150 million in cash; provided that, for both the payment at closing and the payments for future performance, at our option, up to 25% of the applicable payment may be paid by delivering newly-issued common units of The Carlyle Group L.P. (Common Units) that have been registered under the Securities Act of 1933, as amended. The actual number of Common Units to be delivered to the Seller will be determined by the closing price of the Common Units one trading day prior to the date of delivery of the Common Units to the Seller. The Seller will be subject to the trading policies generally applicable to our and our subsidiaries employees who hold Common Units.
Forward Looking Statements
This Current Report on Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the benefits we expect to realize as a result of our agreement to acquire AAG, as well as our expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements. You can identify these forward-looking statements by the use of words such as outlook, believes, expects, potential, continues, may, will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words or other comparable words. These statements are subject to risks, uncertainties and assumptions, including those associated with a failure to complete the acquisition and the failure of AAG to perform as we expect, as well as those described under the section entitled Risk Factors in our Form 10-K for the year ended December 31, 2017 filed with the SEC on February 15, 2018, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SECs website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
|Item 9.01.|| |
Financial Statements and Exhibits.
|99.1||Press Release, dated October 15, 2018.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|THE CARLYLE GROUP L.P.|
|By:||Carlyle Group Management L.L.C.,|
|its general partner|
|Date: October 15, 2018||By:||/s/ Curtis L. Buser|
|Name:||Curtis L. Buser|
|Title:||Chief Financial Officer|
The Carlyle Group
For Immediate Release
October 15, 2018
The Carlyle Group to Acquire Apollo Aviation Group, a Commercial Aviation Investment Firm
Carlyle Expands Global Credit Platform with Acquisition
Firm Manages $5.6 Billion in Institutional Capital and Structured Aircraft Financings
New York, NY Global alternative asset manager The Carlyle Group (NASDAQ: CG) today announced it has agreed to acquire 100% of Apollo Aviation Group (AAG), a global commercial aviation investment and servicing firm with $5.6 billion in assets under management including 243 aircraft owned, managed or committed to purchase. AAG will become a new business line, operating as Carlyle Aviation Partners Ltd., within Carlyles Global Credit Segment. The transaction is subject to customary conditions and is expected to close no later than January 31, 2019.
Established in 2002, AAG raises closed-end funds from limited partners to provide financing solutions to the commercial aviation sector. AAG purchases, leases and manages portfolios of commercial aircraft. This acquisition will allow Carlyles Global Credit platform to offer long-duration exposure to commercial aviation markets through a variety of credit, equity and structured finance instruments.
Carlyle Co-CEO Kewsong Lee said, This corporate acquisition expands Carlyles Global Credit capabilities, particularly in the growing asset-based credit market. AAG is a scalable platform with strong growth prospects given its 16-year history and track record of performance.
Mark Jenkins, Head of Carlyles Global Credit Segment, said, AAGs expertise in managing and investing in aviation assets and use of long-term fund structures allows it to invest well through economic cycles. We are excited to welcome the highly accomplished AAG management team, which is a proven force in the growing commercial aviation finance market.
Bill Hoffman, Chairman of Apollo Aviation, said, The Carlyle Group has demonstrated itself to be one of the leading alternative asset managers worldwide and Robert and I couldnt think of a better home for the business weve built over the past 16 years.
Robert Korn, President of Apollo Aviation, added, Joining forces with The Carlyle Group allows us to continue to support our airline customers and play an even greater strategic role in the aviation sector.
Aviation / Lessor Market Growth
Global passenger traffic has doubled every 15 years (1973 2015)
Passenger growth: 1987 1 billion; 2005 2 billion; 2013 3 billion
~41,000 aircraft with a value of ~$6.1 trillion are forecast to be delivered by 2038
The percentage of operators fleets sourced through lessors has grown from 20% to 40% since 1998; expected to grow to 50%+ of the global fleet by 2020
Carlyles Global Credit platform, with $36 billion in assets as of June 30, 2018, includes funds in Loans & Structured Credit, Direct Lending, Opportunistic Credit, Energy Credit and Distressed Credit. These businesses have more than 100 investment professionals in New York, Washington, DC, Los Angeles, Chicago, Hong Kong and London.
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About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $210 billion of assets under management across 335 investment vehicles as of June 30, 2018. Carlyles purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments Corporate Private Equity, Real Assets, Global Credit and Investment Solutions in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, real estate, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,625 people in 31 offices across six continents.
About Apollo Aviation Group
Apollo Aviation Group is a multi-strategy aviation investment manager that seeks to capitalize on its extensive technical knowledge, in-depth industry expertise and longstanding presence in the mid-life commercial aviation sector. Founded in 2002, Apollo Aviation has total assets under management of $5.6 billion, with over 80 employees and offices in the US, Ireland and Singapore. The company has 243 aircraft owned, managed or committed to purchase, and 11 aircraft engines, with 110 airlines lessees in 58 countries.
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