DBRS Confirms MILIT-AIR Inc. at AAA, Stable

DBRS Limited (DBRS) has today confirmed the ratings of the Amortizing Secured Bonds Series 1 and Amortizing Secured Bonds Series 2-1 (collectively, the Amortizing Bonds) issued by MILIT-AIR Inc. (the Company) at AAA with Stable trends.

DBRS has reviewed the proposal made by the Company to its bondholders regarding its recommendation to its bondholders to approve a Trust Indenture amendment to permit MILIT-AIR Inc. to allow Bombardier Inc. to sell its concessionaire stake to a subsidiary of CAE Inc. (the CAE affiliate). If bondholders’ approval is obtained by way of an Extraordinary Resolution on September 15, 2015, the Company intends to amend certain contract documents to permit the assignment of Bombardier Inc.’s responsibilities to the CAE affiliate. The proposed supplemental indenture would grant the Company the ability to allow the assignment of the concessionaire after approval has been granted by the Government of Canada through the Canada Services Agreement, while the proposed amendments to the Concession and Agency Agreement and Lease Agreement would completely assign the responsibilities and obligations of Bombardier Inc. to the CAE affiliate.

Under the proposed transaction, the bonds would still benefit from the assignment of the Firm Fixed Fees payable by the Government of Canada directly to the collection trustee, which in turn transfers the amounts owing to the bondholder trustee for payment of MILIT-AIR’s debt service and administrative costs. In addition, bondholders would remain isolated from any performance risk of the CAE affiliate. As such, in DBRS’s view, the proposed amendments do not alter the fundamental credit strengths of the Amortizing Bonds.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.