Silverjet plc, the British exclusively business class airline, today announces that on 2 May 2008 it entered into both a Subscription Agreement and a Loan Facility Agreement with Viceroy Holdings LLC which is affiliated with Viceroy Fund, an international luxury development fund based in the USA and UAE, details of which are set out below.
Lawrence Hunt, Chief Executive of Silverjet said:
"I am delighted to confirm that following the announcement on 30 April concerning the Memorandum of Understanding, Silverjet has now entered into a binding conditional agreement and secured the commitment of a high quality, long-term strategic investor. Viceroy is committed to the development and expansion of Silverjet, and proposes to inject further capital to develop the Silverjet proposition.
"This investment means that Silverjet is now well placed, both financially and strategically, to exploit the opportunities which exist in the airline and all business class market - a market which we now dominate."
Introduction
On 30 April 2008, Silverjet announced that it had entered into a memorandum of understanding with an investor which provided, inter alia, that the investor would initially directly invest US $25.0 million (£12.6 million) to assist in financing the ongoing development of Silverjet.
Silverjet announces today that on 2 May 2008 it entered into both a Subscription Agreement and a Loan Facility Agreement with Viceroy, an international luxury development fund based in the UAE and USA that has been investing in the United States since 1997 and elsewhere since 2005.
Under the Loan Facility Agreement, Silverjet Aviation, a wholly owned subsidiary of Silverjet, has been granted a facility to borrow up to approximately £8.4 million. Under the Subscription Agreement, which is conditional, inter alia, upon Shareholder approval, Silverjet proposes to issue 25,061,728 Subscription Shares at 17 pence per share to Viceroy, to raise gross proceeds of approximately £4.3 million.
A letter from the Chairman of Silverjet, together with a notice convening an Extraordinary General Meeting of the Company to approve the issue of the Subscription Shares in connection with the Subscription, will be posted to Shareholders shortly.
Details of the Loan Facility
Under the Loan Facility, Viceroy has provided to Silverjet Aviation a total facility of up to approximately £8.4 million. Drawings under the facility will attract interest at LIBOR plus 2 per cent and be repayable in May 2011.
Details of the Subscription
Under the conditional Subscription Agreement, Silverjet proposes to raise approximately £4.3 million (gross) through the issue to Viceroy of 25,061,728 Subscription Shares at 17 pence per share. The Subscription Shares would represent approximately 28.0 per cent of the enlarged issued share capital of the Company following the Subscription.
The Subscription Agreement is conditional upon:
the approval of (a) the Civil Aviation Authority, TFB (under the terms of the Convertible Loan), and (c) Shareholders; and
(ii) Admission.
The approval of the Subscription Agreement by Shareholders is required pursuant to both the Companies Acts and Rule 21 of the Takeover Code as referred to below in the section entitled "Offer period".
Directorate
On Admission, Viceroy will appoint two non-executive directors to the Board of the Company.
Further intended investment by Viceroy
The MOU also sets out the intention of Viceroy to participate and to invest, either directly in Silverjet or otherwise, up to a further US$75.0 million (£38.0 million) in the ongoing development of Silverjet and in the international rollout of the Silverjet brand and concept into new markets within the Middle East, the Far East and Africa, using the Middle East as a regional hub.
Negotiations concerning this further investment and the strategy for the rollout of the Silverjet brand and concept are continuing, details of which will be announced in due course. This announcement will also address how the rollout will be organised in conjunction with Silverjet's own operations, and also Silverjet's intentions concerning the two Boeing 767ER aircraft which it has agreed to acquire from ThomsonFly.
Reasons for the Loan Facility and Subscription and use of proceeds
On 30 April 2008, Silverjet announced that, following recent material increases in fuel prices and tightening of credit conditions in the airline industry, its working capital had deteriorated and its working capital reserves were limited.
Against this background, the Directors believe that the Subscription and Loan Facility announced today will provide Silverjet with the necessary finance to restore its working capital and enable it to continue to develop its business.
Current trading and prospects
Notwithstanding the impact of tougher economic conditions and the increasingly challenging environment for airlines, and in particular Silverjet following recent publicity concerning the business class only airline model, Silverjet has enjoyed strong growth in Revenue Seats which amounted to 10,594 in April 2008, an increase of over 50% compared to October 2007. It has also since December 2007, the first month throughout which three services were operated, experienced an upward trend in Revenue Load Factor.
The increase in Revenue Seats and Revenue Load Factor since January 2007 has, following the January promotional sale, been achieved in conjunction with increasing yields, which reached an average fare across both routes of approximately £550 per sector (excluding taxes) in April 2008.
Forward bookings are particularly strong as a result of which the Board anticipates that Revenue Seats, Revenue Load Factor and yield will all show further improvement in May.
The Board therefore continues to have every confidence in Silverjet's prospects and expects that it will experience an increase in customer confidence following completion of the Subscription.
Offer period
On 10 April 2008, Silverjet announced that it was in discussions which may or may not lead to an offer for the issued share capital of the Company. Silverjet continues to be in an "offer period" as defined in the Takeover Code, however no firm proposals have been submitted to the Company to date.
Rule 21.1 of the Takeover Code requires, inter alia, that where the board of a company has reason to believe that a bona fide offer might be imminent, the board must not, without the consent of shareholders in general meeting, issue any authorised but unissued shares.
Accordingly, the Subscription Agreement requires the consent of Shareholders pursuant to this Rule.
-Ends-
© Press Release 2008
