EXHIBIT A
MORGAN STANLEY AIRCRAFT FINANCE
NOTICE OF REDEMPTION
Subclass A-2, B-1, C-1 and D-1 Notes due March 15, 2023
Subclass A-3, A-4, A-5, B-2 and C-2 Notes due March 15, 2025
May 15, 2001
NOTICE IS HEREBY GIVEN that Morgan Stanley Aircraft Finance ("MSAF")
intends to redeem in whole, on the June 15, 2001 payment date (the "Redemption
Date"), its subclass A-2, B-1, C-1 and D-1 Notes due March 15, 2023 and its
subclass A-3, A-4, A-5, B-2 and C-2 Notes due March 15, 2025 pursuant to Section
3.10(a) of the Indenture dated as of March 3, 1998 (as supplemented, the
"Indenture") by and between MSAF and Bankers Trust Company, as trustee (the
"Indenture Trustee"). Capitalized terms used in this notice and not defined
herein shall have the meanings set forth in the Indenture.
The following table sets forth the CUSIP, ISIN and CCN for each
subclass of Notes being redeemed on the Redemption Date:
- ------------------- --------- -------------- ------------
Subclass of Notes CUSIP ISIN CCN
- ------------------- --------- -------------- ------------
A-2 61745WAM3 US61745WAM38 009188363
A-3 61745WAW1 US61745WAW10 011988814
A-4 61745WAX9 US61745WAX92 011988857
A-5 61745WAY7 US61745WAY75 011988873
B-1 61745WAN1 US61745WAN11 009188380
B-2 61745WAZ4 US61745WAZ41 011988881
C-1 61745WAP6 US61745WAP68 009188436
C-2 61745WBA8 US61745WBA80 011988903
D-1 61745WAQ4 US61745WAQ42 009188452
The Notes will be redeemed at the applicable Redemption Price, plus
accrued and unpaid interest, as of the Redemption Date. The Redemption Price
payable on the Redemption Date in respect of each subclass of Notes will be
calculated in accordance with the terms of the Indenture.
The Redemption Price in respect of the subclass A-2, A-3, A-4, A-5, B-1
and B-2 Notes will be in an amount equal to the product of the applicable
Redemption Premium set forth below and the Outstanding Principal Balance (after
taking into account any other repayments made on June 15, 2001 as a result of
the application of Available Collections in accordance with the Indenture) of
such subclass as of the Redemption Date.
Subclass of Notes Redemption Premium
- ------------------------------------- ---------------------
A-2 100.50%
A-3 100.50%
A-4 101.00%
A-5 101.00%
B-1 101.50%
B-2 101.50%
The Redemption Price in respect of the subclass C-1 and C-2 Notes will
be the higher of (x) the discounted present value of Scheduled Principal Payment
Amounts and interest on the subclass C-1 or C-2 Notes, as the case may be, from
the Redemption Date to and including the applicable Expected Final Payment Date
(March 15, 2013, in the case of the subclass C-1 Notes and October 15, 2016 in
the case of the subclass C-2 Notes), discounted at a rate equal to the Treasury
Yield plus 0.5% (in the case of the subclass C-1 Notes) or 1.0% (in the case of
the subclass C-2 Notes) and (y) the Outstanding Principal Balance (after taking
into account any other repayments made on June 15, 2001 as a result of the
application of Available Collections in accordance with the Indenture) of the
subclass C-1 or C-2 Notes, as the case may be, as of the Redemption Date.
The Redemption Price in respect of the subclass D-1 Notes will be the
higher of (1) the discounted present value of Scheduled Principal Payment
Amounts and interest on the subclass D-1 Notes from the Redemption Date to, but
not including, March 15, 2003, plus the product of the applicable Redemption
Premium (105.25%) and the assumed Outstanding Principal Balance for March 15,
2003, discounted at a rate equal to the Treasury Yield plus 1% and (2) the
Outstanding Principal Balance (after taking into account any other repayments
made on June 15, 2001 as a result of the application of Available Collections in
accordance with the Indenture) of the subclass D-1 Notes as of the Redemption
Date.
See Schedule I attached hereto for the definition of Treasury Yield.
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The actual amount payable in respect of each subclass of Notes on the
Redemption Date will be set forth in a further notice to be delivered prior to
the Redemption Date.
MSAF will deposit the applicable Redemption Price, plus accrued and
unpaid interest, in respect of each subclass of Notes in the MSAF
Defeasance/Redemption Account at Bankers Trust Company on or prior to the
Redemption Date. Subject to the satisfaction of certain conditions, including
the surrender of the Notes of each subclass to the Indenture Trustee, the
Indenture Trustee shall pay the applicable Redemption Price, plus accrued and
unpaid interest, in respect of each subclass of Notes on the Redemption Date to
Depository Trust Company ("DTC") or Cede & Co., as the registered holder of the
Notes, or to DTC participants for distribution to noteholders in accordance with
DTC, Clearstream or Euroclear rules and procedures, as applicable.
Upon payment of the Redemption Price, plus accrued and unpaid interest,
in respect of the Notes on the Redemption Date, interest on each subclass of
Notes will cease to accrue on and after the Redemption Date.
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Schedule I to Notice of Redemption
For purposes of determining the Redemption Price for the subclass C-1,
C-2 and D-1 Notes on the Redemption Date:
"Treasury yield" means (1) with respect to redemption of the subclass
D-1 Notes, a per annum rate (expressed as a monthly equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity of the 6 1/4%
United States Treasury Note maturing on February 15, 2003, and (2) with respect
to redemption of the Subclass C-1 and C-2 Notes, the interest rate (expressed as
a monthly equivalent yield) determined on June 11, 2001 to be the per annum rate
equivalent to the semiannual yield to maturity (and in the case of United States
Treasury bills, converted to a bond equivalent yield) for United States Treasury
securities maturing on the Average Life Date of such subclass and trading in the
public securities markets, either:
o as determined by interpolation between the most recent
weekly averaged yield to maturity for two series of United States
Treasury securities trading in the public securities markets, (A) one
maturing as close a possible to, but earlier than, the Average Life
Date of such subclass and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such subclass in each case
as published in the most recent H.15(519);
or
o if a weekly average yield to maturity for United States
Treasury securities maturing on the Average Life Date of such subclass
is reported in the most recent H.15(519), such weekly average yield to
maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or
any successor publication, published by the Board of Governors of the Federal
Reserve System and the "most recent H.15(519)" is the H.15(519) published prior
to the close of business on June 11, 2001.
"Average Life Date" of any subclass of Notes is the date which follows
the applicable Payment Date by a period equal to the Remaining Weighted Average
Life of such subclass.
"Remaining Weighted Average Life" means, with respect to any subclass
of Notes on any Payment Date, (i) the sum of the products of (A) the portion of
the Scheduled Principal Payment Amount allocable to such subclass in accordance
with Section 3.09 of the Indenture on each subsequent Payment Date (each, a
"Subsequent Date") and (B) the number of days remaining until such Subsequent
Date divided by (ii) the Outstanding Principal Balance of such subclass on such
Payment Date.
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