Amazon invests $69m in freighter lessor ATSG

Amazon has already taken the opportunity to invest in US air cargo freighter lessor Air Transport Services Group (ATSG), taking a 9.99% share in the company.
The e-commerce firm revealed on Friday that it had exercised its right to invest in ATSG by taking just over 7m shares of common stock following on from its deal with the lessor to launch a 20 freighter network covering the US.
When the deal to lease the aircraft was announced two weeks ago, ATSG revealed that Amazon pay $9.73 per share. The investment therefore comes to just over $69m.
In total, Amazon will have the opportunity to purchase 19.99% of ATSG in three tranches.
The first tranche was available from the contract effective date and covers 12.8m warrants, some to be vested immediately with the remainder over the course of the placement of B767-300s aircraft this year and next year.
The second tranche will be issued in around two years and the final tranche will occur in around four and a half years.
When Amazon’s shareholding reaches 10% it will have the option to nominate a non-voting board member.
Shortly after announcing the deal with Amazon, ATSG said it was not unusual for Amazon to invest in long-term service providers.
"The other party [Amazon] views this as an important relationship and that interest is not atypical of how they have approached other partnerships that they also felt made sense for them on a more long-term basis.
"All that had to be factored into our view of whether this is a real positive deal for our shareholders and we believe it is accretive from a cash flow standpoint to our existing shareholder base and certainly changes the dynamic of our revenue structure in terms of diversification − Amazon is of course a fast-growing company."