Gama Aviation delists from LSE, tender offer of $40 million return to shareholders

Gama Aviation has delisted from the London Stock Exchange (LSE) and has proposed a tender offer of £32.6 million (approximately $40.9 million) return of capital to shareholders. The company said the delisting will allow it to realise permanent cost savings and will free management time to focus on executing its strategy. The decision to delist was primarily driven by the lack of liquidity in the shares, which would be further reduced as a result of the tender, limiting the institutional interest in the stock, thus not giving shareholders a real opportunity to trade the shares. Gama Aviation said that the average daily volume of ordinary shares traded over the past year were only approximately 14,900. In addition, the company has not used the equity market as a source of funding since 2018 and the listing held substantial ongoing costs, as well as significant reporting and regulatory burden for Gama Aviation. The company, therefore, viewed the cost and time management limitations of the listing far outweighed its benefits. A source familiar with the matter said that the proceeds from Gama Aviation's sale of its US MRO business Jet East in October last year for $131 million will enable it to return capital to its shareholders via the tender. The sale, along with Gama's other future activities, are expected to change its investment profile. Gama Aviation said its fixed base operation activities in Sharjah, Jersey, and Glasgow generate ""strong margins"" and are a focus for its ""current and future capital expenditure"". Gama is investing in such projects in order to grow, such as through the acquisition of new contracts and targeted M&A. Gama Aviation said its first quarter revenues are ""marginally below management expectations"". It said the margins have been impacted by high inflation pressures and supply chain issues. It also singled out a particular contract with its Special Mission strategic business unit division negatively impacting its revenues due to low aircraft availability. Gama Aviation said that in the ""near to medium term"", the company did not expect to generate positive net cash flows, instead prioritising long term growth and profitability. Dial Partners had acted as advisors on the delisting and tender offer, as well as the sale of Jet East and Gama Aviation's acquisition of Specialist Aviation Services in February 2024.