TIDMFJET
RNS Number : 7153L
Fastjet PLC
01 May 2020
fastjet Plc
("fastjet", the "Company" or the "Group")
Trading Update, Sale of Embraer Aircraft and Shareholder Loan
Arrangement
01 May 2020
fastjet, the low-cost African airline, today provides an update
to the market and shareholders.
Trading Update
On 7 April 2020 the Company announced that, following the
country-wide lockdowns in South Africa and Zimbabwe due to the
coronavirus ("COVID-19") outbreak, it had suspended flight
operations. Following extensions to the lockdowns in both
countries, the Company has continued to suspend flight operations.
The Company continues to assess the situation daily and will
provide further updates as and when necessary. fastjet intends to
resume flight operations once permitted by the South African and
Zimbabwean Governments and flight schedules will remain flexible in
the weeks and months ahead depending on how each respective
government phases the release of its lockdown and, thereafter, on
demand for seats. At all times, the safety of the Company's
employees and customers will remain of paramount importance and
focus.
Capital Requirements and Restructuring Proposal
As announced on 7 April 2020, the Board expects that the Company
would need further funding by June 2020 to enable it to continue
operating in its current form. To address this funding requirement,
the Company, as announced previously, has been in discussions with
an investor consortium led and underwritten by Solenta Aviation
Holdings Limited ("SAHL") and other local investors in Zimbabwe
(the "Investor Consortium"), in relation to the disposal of the
Group's holding in fastjet Zimbabwe (the "Disposal"). The Investor
Consortium remains committed to the Disposal but, as previously
announced, at potentially modified terms. Discussions with the
Investor Consortium will only restart when the impact and timeline
of the lockdowns in South Africa and Zimbabwe are better
understood.
As announced on 12 March 2020, with delays to the Disposal the
Company had engaged with its main creditors, following which
several creditors had agreed to defer due dates for repayments
and/or have agreed to settlement discounts to current carrying
values of their liabilities (the "Creditor Discounts"). The
Creditor Discounts have reduced the Company's total liabilities by
US$0.6 million to date.
Management remains in discussions with certain creditors and has
identified additional discounts of between US$1.0 million and
US$3.0 million (the "Additional Creditor Discounts), which would
require additional capital for these to be realised. Such
Additional Creditor Discounts would relieve significant pressure on
the Company's current balance sheet obligations in the future.
Subsequently, the Directors believe that - based on current
financial projections, funds available and expected to be made
available, together with the revised creditor terms agreed above -
the Company will continue to have sufficient resources to meet its
operational needs until the end of July 2020. The headroom of
available cash resources, however, remains minimal and will be
drawn on during the next three months to sustain and settle fixed
costs and obligations of the Company should the lockdowns and
travel restrictions in South Africa and Zimbabwe be extended into
May 2020 and beyond.
In the event that the Company is unable to complete the
Disposal, raise additional new capital, secure the Additional
Creditor Discounts, or the current COVID-19 induced lockdowns and
related travel restrictions are extended past June 2020, the
Directors believe the Company would be unable to continue trading
as a going concern beyond 31 July 2020.
Cash Position
As at 22 April 2020, the Group had cash reserves of US$1.9
million with no restricted cash. Of the Company's US$1.9 million
cash reserves, US$0.4 million is in Zimbabwe and currently
unrestricted.
Shareholder loan facility agreement and Related Party
Transaction
The Company has negotiated a US$600,000 loan facility with SAHL
(the "Additional Shareholder Loan"). The Additional Shareholder
Loan is being provided to aid the Company with its overall working
capital and future liquidity needs during the extended lockdown
and, specifically, in the start-up period of operations following
the easing of the lockdown and travel restrictions in South Africa
and Zimbabwe.
The Board feels that the additional liquidity will provide extra
cash into the overall Group, as fixed costs continue during the
lockdown and in anticipation of reduced demand for air travel in
the months ahead, due to COVID-19, following any restart of
operations.
The key terms of the Additional Shareholder Loan are as
follows:
-- US$600,000 facility to be provided to the Company by SAHL;
-- Fixed interest rate of 10%, calculated daily, based on a
360-day loan period and paid monthly in arrears;
-- Initial six-month term with the right for the Company to
extend twice thereafter for further periods of six months each, up
to a maximum 18-month term;
-- On any renewal extension, a rollover renewal fee of 1% of the
loan value shall be payable (US$6,000) per rollover;
-- The Additional Shareholder Loan shall be included and secured
by the collateral and security package already held under the
current US$2,000,000 Shareholder loan facility agreed with SAHL on
4 March 2018 and amended on 16 November 2018 (the "Existing
Shareholder Loan");
-- The Board has approved that SAHL register an aircraft
mortgage to secure the Existing Shareholder Loan and the Additional
Shareholder Loan, together US$2,600,000 (the "Outstanding
Shareholder Loan"), against one of the Company's EMB145 aircraft
currently registered in South Africa;
-- SAHL is entitled to convert at any time the full or any part
of the Outstanding Shareholder Loan of US$2,600,000 into ordinary
shares of the Company, at a weighted average share price over the
90 days up to the drawdown date of the Additional Shareholder Loan,
subject to the approval of the Board;
-- SAHL is entitled to a fee of $20,000 to cover legal and
fundraising costs, payable on the first drawdown of the Additional
Shareholder Loan; and
-- The Additional Shareholder Loan includes standard
representations, warranties and events of default, including
pledged security.
SAHL is considered to be a related party to the Company by
virtue of SAHL being a Substantial Shareholder as defined in the
AIM Rules and, as such, the entering into of the Additional
Shareholder Loan constitutes a related party transaction pursuant
to Rule 13 of the AIM Rules. The Directors of the Company,
excluding Mark Hurst ( Group Interim Chief Executive Officer), who
is considered a related party to SAHL, consider that, having
consulted with the Company's Nominated Adviser, the terms of the
transaction are fair and reasonable insofar as its Shareholders are
concerned.
Sale of Embraer Aircraft and Related Party Transaction
As announced on 24 April 2020, the Company entered into an
agreement with Solenta Aviation (Pty) Limited ("Solenta"), a South
African subsidiary company of SAHL, involving the sale of one of
the Company's Embraer 145 aircraft (the "Embraer 145") on 9 March
2020 (the "Sale") for a consideration of US$2.2 million (the
"Consideration").
Solenta is considered a related party to the Company by virtue
of being a subsidiary of SAHL, who is a Substantial Shareholder as
defined in the AIM Rules. The Sale has been identified as a related
party transaction under Rule 13 of the AIM Rules but was not
identified as such at the time. The Sale also constituted a
substantial transaction for the purposes of Rule 12 of the AIM
Rules.
The Directors of the Company, excluding Mark Hurst ( Group
Interim Chief Executive Officer), who is considered a related party
to SAHL, have since evaluated the Sale and, having consulted with
Liberum in its capacity as the Company's Nominated Adviser,
consider the Sale to have been fair and reasonable insofar as the
Company's Shareholders are concerned.
This announcement is released by fastjet plc and contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Kris Jaganah, Group Chief Financial
Officer.
fastjet plc Tel: +27 (0) 10 070 5151
Mark Hurst, Group Interim Chief
Executive Officer
Kris Jaganah, Group Chief Financial
Officer
Liberum Capital Limited Tel: +44 (0) 20 3100 2222
Nominated Adviser and Broker
Andrew Godber
Clayton Bush
James Greenwood
William Hall
Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571
Financial PR
Angharad Couch
Toby Moore
Nick Hayns
NOTES TO EDITORS
About fastjet
Fastjet is a multi-award-winning African value airline that
began flight operations in 2012. Its awards include Leading African
Low-Cost Carrier World Travel Awards 2016, 2017, 2018 and 2019, and
Skytrax World Airline Awards Best Low-Cost Airline in Africa
2017.
Today, fastjet connects the three major cities in Zimbabwe by
flying between Harare and Victoria Falls and Harare and Bulawayo.
Internationally the airline offers flights from Harare and Bulawayo
to Johannesburg in South Africa.
In October 2018, fastjet acquired an interest in FedAir, which
provides unscheduled shuttle and charter services to the game
lodges in the Southern Africa region.
Since commencing operations fastjet has flown over 3.5 million
passengers and has established itself as a punctual, reliable, and
affordable airline, with value-added services inclusive of free
baggage allowance(s), airport lounge access, dedicated check-in and
more according to the new fare attributes introduced across their
network.
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END
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May 01, 2020 10:59 ET (14:59 GMT)
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