Abu Dhabi Aviation Co. (ADA) is seeking shareholder approval to issue a 4 billion dirhams ($1.09 billion) convertible bond to ADQ Aviation and Aerospace Services LLC, in a transaction that will see the subsidiary of the wealth fund ADQ take nearly 60% stake in the company.

In October last year, ADQ Aviation offered to move its entire shareholdings of Etihad Engineering and the Advanced Military Maintenance Repair and Overhaul Centre into Abu Dhabi Aviation, as well as its 50% ownership of Global Aerospace Logistics LLC.

In a regulatory filing on ADX on Friday, ADA said it will issue to ADQ Aviation mandatory convertible instrument of around AED4 billion that would convert immediately on completion of the transaction into new ADA shares at AED 6.14 per new ordinary share.

Upon completion of the deal, which is expected in Q2 2023, ADQ Aviation will hold 59.45% of the entire issued share capital of ADA.

ADA said the deal would be beneficial due to cost synergies through shared services and general scale, improved turnaround times due to consolidation of OEM relationships and potential for localization of maintenance activities.  

(Reporting by Brinda Darasha; editing by Daniel Luiz)