Priority 1 Logistics-ECL set to be placed into administration as funding falls short-06/05/2026

Research evidence excerpt

Priority 1 Logistics-ECL set to be placed into administration as funding falls short-06/05/2026

tes this to reduced flying activity at

European Cargo Limited ("ECL"), the issuer's principal operating subsidiary, continued operation below breakeven utilization, and related

working capital and fuel cost pressures.

• Following these developments, sufficient further funding was not made available to support ECL's ongoing working capital requirements.

• ECL's board, after taking legal and financial advice, has determined that the subsidiary is no longer able to meet its obligations as they

come due and sees no realistic path to avoiding insolvency. As a result, the directors intend to appoint administrators to ECL at the earliest

opportunity to limit creditor losses.

• Link to announcement

Capital structure and asset backing

• As of 16 May 2025, IBA appraised the aircraft and engines at USD 510m. Since then, operating performance has deteriorated significantly

leaving question marks around the realizable asset values. We note that the company has not reported figures since Q4’25 or addressed

the broader market since December 2025, making it difficult to assess the current situation.

o Based on latest available information, the asset base consists of:

15x aircraft including 12x A340-600 and 3x A340-500. 7x aircraft has been converted to cargo aircraft (provided that the

conversion of the final aircraft went through as expected in Q1’26).

70-75x Trent 500 engines suitable for A340 aircraft. Previous valuation has been around USD 1m per engine.

Various smaller items / spare parts previously valued at around USD 10-15m.

• The current capital structure looks like this, according to Stamdata / Nordic Trustee sources:

o 1st priority (1O bonds): USD 29m