FastJet to raise $48m to stabilise the airline with Solenta injecting $19m

5th Jan 2017 09:04

(ShareCast News) - In a bid to stabilise Fastjet and reach cash flow break even, chief executive Nico Bezuidenhout aims to increase equity by at least $48m with Solenta, an African commercial aviation firm, injecting $19m into the Africa-focused budget airline and through a share placing.Solenta will become a 28% shareholder of the AIM-listed airline and appoint two directors to the board as it invests $19.2m, which would see it operate three wet-leased aircrafts and provide aircraft, crew, maintenance and insurance (ACMI), and supply other services over the next five years.Johannesburg-based Solenta currently operates 49 aircrafts under five airport operations and customer services (AOC) contracts and has strategic alliances, or AOCs pending, in a further seven African countries. It also has experience and regulatory approval in operating the Embraer aircraft, which Fastjet is transitioning to.Fastjet will issue Solenta about 95.6m shares to buy a Solenta group special purpose entity that will own the right to enter into the three ordinary course wet-leases and to receive discounts worth $19.2m on the future costs of services provided by Solenta.The company also plans to raise $28.8m in equity through an accelerated book build at 16.3p per share, which is 25 discount.The funds raised by the equity injection by Solenta and the book build will provide the company will capital to implement the final part of its stabilisation plan and to reach cash flow break even by the final quarter of this year.It will also allow the company to leverage Solenta's existing African business and provide a platform to grow Fastjet cost effectively to pursue the "medium to long-term objective of becoming the first truly pan-African low-cost airline".Bezuidenhout, interim chair and chief executive, said: "Our agreement with Solenta represents a good operational and strategic fit. It provides Fastjet with access to fleet and related services which, together with the funds raised through our proposed placing, will allow us to successfully implement the final stages of our stabilisation plan."We have made good progress with the plan and the near-term priority continues to be to fully stabilise the business and to reach cash flow break even by the fourth quarter of this year."Shares in Fastjet were up 2.23% to 17p at 1026 GMT.