VistaJet, which offers private jet travel through a membership model, has leaned heavily on the debt markets to fuel its rapid growth. Its most recent deal was a $500m bond issue in May 2023, which carries a 9.5% coupon and matures in 2028.

Those notes are currently trading at a yield to worst of 10.2%, and the new preferred equity instrument would price a few percentage points wider than that, sources said.

That’s a much better outcome than VistaJet probably would have gotten in January, when those same senior notes were yielding around 17%. Trading levels have improved across the company’s debt complex this year, after a tough time in late 2023 amid legal fights and liquidity concerns; the rebound reflects solid revenue growth in recent quarters, according to sources.

VistaJet has not given up its litigious ways, however. In a letter to bondholders earlier this year, its billionaire founder Thomas Flohr said he would take legal action to counter “half-truths, false rumors and lies” allegedly disseminated by a competitor.

Minimizing turbulence

VistaJet is privately held, with a large chunk of its equity owned by Flohr himself. The New York-based private equity firm Rhône Capital bought a minority stake back for $200m back in 2017 — a deal that valued the firm at $2.5bn.

While it’s been clear for some time that VistaJet needs to raise cash, the founder’s large ownership stake has been a significant factor in discussions around how such a capital raise should be structured, said 9fin sources familiar with the firm.

One source said VistaJet was “very investible” and suggested it could “easily” find a buyer for a minority equity stake if it wanted; however, such a deal would dilute existing shareholders.

The company is understood to have explored the possibility of raising term loan debt, but would likely struggle to do so because of its cash flow profile, according to sources. The proceeds raised through the new preferred instrument would help address that, the sources added.

While other firms including Bank of America have participated in prior VistaJet bond deals, Jefferies has an especially strong and longstanding relationship with the company: the bank’s parent company Jefferies Financial Group even became a VistaJet shareholder when the company acquired JetSmarter back in 2019.

In a mark of that deep relationship, Jefferies’ chief executive Richard Handler — known for being at the more hands-on end of the CEO spectrum — has made personal appearances on internal calls to discuss the potential preferred equity transaction, sources said.

As part of the JetSmarter acquisition, private equity firm Clearlake Capital also received an equity stake in VistaJet’s parent entity, Vista Global.

Jefferies declined to comment. We reached representatives for VistaJet, but they did not provide a comment by the time of publication. Rhone Capital did not respond to emails seeking comment.