General Electric shares soared on Monday amid reported buyout interest in its jet-leasing business, fuelling optimism over the beleaguered industrial giant’s turnaround.
Bloomberg reported late Friday that private equity firm Apollo Global Management is lining up financing for a potential takeover of GE Capital Aviation Services (GECAS), considered one of the conglomerate’s prized assets, in a bid that could be valued at up to $40bn. The report noted that no deal is imminent and GE hasn’t committed to selling the business.
GE bulls were likely excited that the proceeds from a sale could make a sizeable dent in the company’s $115 billion debt load. The shares could vacillate as news of more asset sales leak into the press. However, the devil is in the details.
In November Gordon Haskett analyst John Inch intimated the bankruptcy of helicopter lessor Waypoint Leasing could spell trouble for GE Capital (“GECC”), which houses GECAS:
General Electric Co. shares took another dive on Monday, after Gordon Haskett analyst John Inch said the bankruptcy of helicopter lessor Waypoint Leasing could spell trouble for GE’s finance arm.
Inch highlighted Waypoint’s struggles amid an energy industry pullback in rotorcraft usage because of distress in the offshore oil and gas sector. Lessors have too much capacity and too little demand, Inch wrote in a note to clients.
The GECAS sale is fraught with risk. Did the “run on the bank” at GECC prompt the GECAS sale? Read more: