Fastjet announced a proposed capital raising last week to raise gross proceeds of £15 million through the issue of new ordinary shares by way of a placing and additional gross proceeds of up to approximately £4.2 million through the issue of up to 8,302,762 new ordinary shares by way of an open offer, all at 50 pence per new ordinary share. The Issue Price of 50 pence represents a significant premium of approximately 116 per cent to the closing price of each existing ordinary share of fastjet of 23.13 pence on 20 July 2016. The airline said that the issue price “has been set at a premium to the current share price so as to enable a number of the existing shareholders to satisfy their internal ownership limits. These shareholders, representing over 50% of the share register, have indicated they are supportive of the proposed Placing which will provide the Company with sufficient funds to execute its new business plan.”
Liberum Capital is acting as sole bookrunner on the Placing. The Placing and Open Offer are not being underwritten.
The proceeds of the capital raising (after expenses) will be used for working capital purposes, allowing the company to stabilise the business and introduce new revenue generating initiatives; as well as being used to implement the company’s revised business plan which is likely to include the introduction of new aircraft type to the fleet and the relocation of the company’s UK head office to Africa.
In addition to the Capital Raising, fastjet is intending to sell its owned Airbus A319 in the course of the next six-12 months.
The revised business plan includes input from the new CEO, Nico Bezuidenhout, who takes up the role on August 1, which initially prioritises the initiatives required to stabilise the business in the short term. These include continuing with the cost reduction programme and ensuring careful management of the company’s current cash resources, rationalising routes to match capacity with demand and paring back expansion, with no new routes expected to launch for the remainder of 2016. A more flexible approach to the traditional low cost carrier model will also be employed. Better alignment of the company’s infrastructure and fleet to its stage of development and ensuring overheads are appropriate for the size of fastjet’s operations is essential to achieving the desired improvement in cost management, the airline said.
Bezuidenhout joins fastjet from Mango Airlines, the low-cost carrier subsidiary of South African Airways, where he has been CEO since Mango commenced operations ten years ago.
Bezuidenhout will be based in Africa and will oversee the relocation of support functions and management closer to its operations and market. Fastjet states that it intends to further strengthen the Board with additional Non-Executive Directors in due course.