FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For February 21, 2003
Commission File Number 333-66973
AERCO LIMITED
22 Grenville Street
St. Helier
Jersey, JE4 8PX
Channel Islands
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- _____
INDEX TO EXHIBITS
Item
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1. Press release dated February 21, 2003.
24. Power of Attorney for AerCo Limited.
Page 2 of 3
SIGNATURE
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, thereunto duly authorized.
Dated: February 21, 2003
AERCO LIMITED
(Registrant)
By: /s/ Adrian Robinson
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Name: Adrian Robinson
Title: Attorney-in-Fact
Page 3 of 3
Item 1
AERCO LIMITED
22 Grenville Street, St. Helier, Jersey, JE4 8PX
Channel Islands
PRESS RELEASE
Under the terms of the trust indenture dated as of July 15, 1998 as amended and
restated on July 17, 2000 (the "Trust Indenture") governing the AerCo Notes,
AerCo Limited ("AerCo" and, together with its subsidiaries "AerCo Group") is
required annually to commission an appraisal of the "base value" of the AerCo
Group portfolio from at least three independent appraisers.
AerCo has obtained desktop appraisals of the "base value" of each of AerCo
Group's 61 aircraft for the year to February 19, 2003 from three independent
aircraft value appraisers: Airclaims Limited ("Airclaims"), Aircraft Information
Services, Inc. ("AISI") and BK Associates, Inc. ("BK"). On the basis of these
three appraisals (Airclaims: $1,056.2 million; AISI $1,175.6 million; BK
$1,336.3 million), the average appraised base value of AerCo Group's portfolio
of aircraft as of February 19, 2003 was approximately $1,189.4 million (the
"2003 Appraised Value") compared with $1,301.9 million as of February 19, 2002.
The decline in the average appraised value of the portfolio at February 19, 2003
compared with the average appraised value at February 19, 2002 is approximately
$40 million greater than the decline in value assumed by the principal payment
tables included in the Trust Indenture. This greater decline is largely
attributable to the global economic downturn combined with the effects of the
terrorist attacks in the United States on September 11, 2001, and the
consequential negative effect that this has had on the global aviation industry
and in particular, on the values of all commercial aircraft.
As a result of the greater than expected decline in the appraised value of AerCo
Group's portfolio, AerCo is required to accelerate the scheduled principal
payments on the Class A Notes to the extent of available cash flows; thus, from
March 17, 2003 (the first payment date for which the 2003 appraisals will be
effective) AerCo will have to redirect certain cash flows, to the extent they
are available, towards eliminating an expected $14 million difference between
the Class A principal balance currently outstanding and the scheduled target
principal balance on the Class A Notes at that date in accordance with the
priority of payments. Class A Note scheduled principal payments are determined
on any payment date by reference to a multiple of the scheduled class percentage
for the Class A Notes on that date and the lesser of (a) the assumed portfolio
value as set forth in the Trust Indenture and (b) 105% of the adjusted portfolio
value, where the adjusted portfolio value of the fleet is calculated by
reference to the most recent appraised values. As has been the case since the
receipt of the aircraft appraisals in February 2002, 105% of the adjusted
portfolio value is less than the assumed portfolio value. Scheduled principal
payments on the Class A Notes rank after interest and minimum principal payments
on the Class A, B, C and D Notes in the priority of payments, but rank prior to
scheduled principal payments on the Class B and Class C Notes and step-up
interest
on the Class A Notes. Thus this redirection of cash flows will cause the
suspension of scheduled principal payments on the Class B and Class C Notes and
step-up interest on the Class A Notes. Despite the suspension of scheduled
principal payments on the Class B Notes, the Class B Notes are expected to
continue to receive minimum principal payments during the next twelve months in
accordance with the Class B Note minimum class percentage as set out in the
Trust Indenture. Class B Note minimum and scheduled principal payments are
determined on any payment date by reference to a multiple of the minimum and
scheduled class percentages for the Class B Notes and the assumed portfolio
value as set forth in the Trust Indenture. Class B Note minimum principal
payments rank prior to payments of interest and minimum principal on the Class C
and Class D Notes and scheduled principal payments on the Class A Notes. Minimum
principal payments are not expected to be made on the Class C Notes in the next
twelve months, as the Class C Notes have been paid down to the Class C Note
scheduled target principal balance which is currently approximately $6 million
lower than the Class C Note minimum target principal balance.
Based on AerCo's current expectation as to cash performance in the next twelve
months, we expect that we will have insufficient cash flows to pay down the
Class A Note principal balance currently outstanding to the Class A Note
scheduled target principal balance determined in accordance with the Trust
Indenture. Accordingly, we also believe that our cash flows will not be
sufficient to make scheduled principal payments on the Class B and Class C Notes
or payments of step-up interest on the Class A Notes. Beyond the next twelve
months, a number of factors, including the rate at which the appraised value of
our portfolio declines and the level of future cash flows, will be relevant in
determining whether we will be able to pay down the Class A Note principal
balance to the Class A Note scheduled target principal balance required and
accordingly resume scheduled principal payments on the Class B and Class C Notes
and payments of step-up interest on the Class A Notes. The greater the decline
in our future annual appraised values, particularly if combined with other
adverse factors, including a continued reduction in our cash flows, the more
likely it will be that our cash flows will continue to be redirected to the
Class A Notes as discussed above.
Further information regarding the appraisals
The appraisers ascertained the "base value" of each aircraft on the basis of an
open, unrestricted, stable market environment as of February 19, 2003 with a
reasonable balance of supply and demand, and with full consideration of each
aircraft's "highest and best use", presuming an arm's-length, cash transaction
between willing, able and knowledgeable parties, acting prudently, with an
absence of duress and with a reasonable period of time available for marketing,
adjusted to account for the maintenance status of each aircraft (with certain
assumptions as to use since the last reported status).
The 2003 Appraised Value does not reflect the values of leases, maintenance
reserves, security deposits or other collateral, if any, related to a particular
aircraft.
An appraisal is only an estimate of value and there can be no assurance that
proceeds received upon any sale of an aircraft would approximate the base value
of that aircraft.
February 21, 2003
For further information please contact: John McMahon or Pat Keating of AerCo
Group's Administrative Agent, debis AirFinance Administrative Services Limited,
at telephone number: + 353 61 360000.
Item 24
POWER OF ATTORNEY
Each of the undersigned, being a Director and officer of AerCo Limited,
hereby individually appoints John McMahon, Huib van Doorn, Sean Brennan, Brian
Marks, Wouter Marinus den Dikken, Pat Keating, Aengus Kelly and Caroline Jones
and each of them, acting on behalf of debis AirFinance Administrative Services
Limited, as Administrative Agent of AerCo Limited, his true and lawful
attorney-in-fact and agent (each an "Attorney-in- Fact"), with full power by
power of attorney of substitution and resubstitution, for him and in his name,
place and stead, in his capacity as a Director and an officer of AerCo Limited,
to sign each Report on Form 6-K which will be filed at least monthly, provided
that where any such Report on Form 6-K is required to contain any information in
addition to or other than a copy of the relevant monthly report to noteholders
the contents of such Report on Form 6-K shall be approved by any one Director of
AerCo Limited prior to the filing thereof, each such Report on Form 6-K
containing a monthly report to noteholders to be filed monthly on or about the
15th day of each month and each other Report on Form 6-K to be filed within the
time prescribed by the Securities and Exchange Commission (the "SEC") upon the
occurrence of certain events listed in the SEC rules and regulations with the
SEC and any amendments thereto, and to file the same with any exhibits thereto
and any other documents in connection therewith with the SEC, granting unto said
Attorney-in-Fact full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said Attorney-in-Fact, or his substitute, may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has caused this Power of Attorney to
be duly executed and delivered in Shannon, Ireland on the date indicated below.
Dated: 24 July 2002 /s/ G. Adrian Robinson
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G. Adrian Robinson
Witness: /s/ B. C. Robins
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Dated: 24 July 2002 /s/ Peter Sokell
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Peter Sokell
Witness: /s/ B. C. Robins
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Dated: 24 July 2002 /s/ Kenneth N. Peters
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Kenneth N. Peters
Witness: /s/ B. C. Robins
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Dated: 24 July 2002 /s/ M. John McMahon
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M. John McMahon
Witness: /s/ B. C. Robins
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Dated: 9 August 2002 /s/ Sean Brennan
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Sean Brennan
Witness: Marian Kennedy
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