RNS Number:3273I
Silverjet PLC
22 November 2007
22 November 2007
Silverjet plc
Proposed #12m placing and #10m convertible loan
Silverjet plc ('Silverjet'), the exclusively business class, low fare, long haul
airline, today announces a proposed placing of #12m (gross) and a proposed
convertible loan of #10m (together the 'Fund Raising'). It is also announcing
separately today its interim results for the six months to 30 September 2007.
* Successful business model underpinned by strong operational performance:
* 80% load factor achieved prior to second daily London Luton to New York
Newark service;
* 38% increase in revenue seats(1) flown in October (6,782) over
September (4,916);
* 85% of services departed on time(2) in October with an average delay of
only 7 minutes;
* Significant increase in yields in recent months;
* Second service from London Luton to New York Newark launched
successfully on 23 September;
* London Luton to Dubai route successfully launched on 18 November;
* Silverjet is the winner of The Sunday Times Award for Best Airline 2007
and two Conde Nast Traveller Awards in 2007, one for Favourite Business
Only Airline and one for Design and Innovation; and
* Zero bags lost to date.
* The Fund Raising gives Silverjet a platform for growth to:
* Invest in its revolutionary customer experience at Luton and Newark,
through further expansion and the development of exclusive arrival
facilities at Luton and enhancement of its unique 30 minute check in
and private jet style experience;
* Place collateral deposits under sale and leaseback arrangements to
conclude the purchase of 2 extended range Boeing 767 aircraft,
currently under exclusive letter of intent from Thomsonfly for delivery
in March 2008; and
* Further strengthen its balance sheet for the development of new routes.
* Under the Placing, subject to Shareholder approval, Silverjet has placed
20,000,000 new Ordinary Shares at 60 pence per share to raise gross proceeds
of #12.0m:
* Directors are subscribing for Placing Shares worth #500,000.
* In addition, Silverjet proposes to secure a convertible loan, subject to
Shareholder approval, of #10m from TFB (Mortgages) Limited ('TFB'), a Reuben
brothers company:
* The loan is convertible by 11 February 2008 into 18,333,333 new
Ordinary Shares. TFB will be obliged to pay Silverjet a further #1.0m
within six months of conversion;
* If not converted by 11 February 2008, the loan will be repayable by 17
December 2009 and will carry an interest rate of LIBOR plus 200bp; and
* Upon conversion TFB will appoint two non-executive Directors to the
board of Silverjet, in a non-executive capacity.
* Interim results
* #11.8m revenue from scheduled flights in the period;
* Closure of Flyjet charter subsidiary and successful transfer of flight
crews to scheduled operations; and
* #14.5m cash (including restricted cash) at 30 September 2007.
(1) 'Revenue seats' represents the number of seats generating commercial revenue
and also passengers on non-refundable tickets that have not flown
(2) 'On time' is defined as departure within 15 minutes of scheduled departure
time.
Lawrence Hunt, Chief Executive of Silverjet said:
"I am delighted with Silverjet's achievements in our first full six months of
trading with our first New York service generating in excess of #12m of revenue
in the period. We are experiencing an incredible customer response on both our
New York and Dubai routes and achieved a load factor of 80% on our New York
route in August. We had 6,782 revenue seats in October, an increase of 38% on
September.
"Our achievements have been recognised with The Sunday Times Award for Best
Airline 2007 and the Conde Nast Traveller Design and Innovation Award 2007.
"Many of the risks we faced at IPO have been mitigated and managed and our
management team has demonstrated its ability to achieve significant results in a
very short space of time.
"In order to roll out our successful business model we are delighted to announce
a proposed placing of #12m, and the support of the Reuben brothers, whose
organisation has provided a proposed convertible loan of #10m, which together
will allow us to develop our revolutionary ground experience at Luton and Newark
and be the first scheduled airline in the world to offer an exclusive arrival
facility for our customers, and to secure our fourth and fifth aircraft to
develop our network."
David Reuben, quoting on the investment in Silverjet, said:
"We are delighted to have made a significant investment in Silverjet today. We
have a long-term interest in the industry and hope that through our association
with Silverjet we will be in a better position to execute our plans. We believe
Silverjet will be a major player in the global aviation business, demonstrated
by their hugely successful launch and performance in their first 9 months of
operation.
"Silverjet's 30 minute, private jet style check in, personalised in flight
experience and low fares we believe positions this airline for rapid growth in
both capacity and potential profits. The endorsement of the media and in
particular winning the Sunday Times Best Airline award and Conde Nast favourite
business only airline has demonstrated Silverjet's leadership position in the
market.
"We are long term investors in the sector and look forward to helping Silverjet
accelerate its development and growth."
For further information, please contact:
Silverjet 020 7357 9477
Lawrence Hunt, Chief Executive
Hogarth Partnership Limited 020 7357 9477
Fiona Noblet
Anthony Arthur
Arden Partners (NOMAD) 020 7398 1638
Chris Fielding
Tom Fyson
Introduction
The Company announces that it proposes (i) to raise #12m (gross) by means of a
placing of 20,000,000 new Ordinary Shares at 60 pence per share and (ii) to
secure a convertible loan of #10m (together the 'Fund Raising').
The Directors intend to use the net proceeds of the Fund Raising to finance the
roll out of Silverjet's exclusively business class airline, through investment
in new terminal and lounge facilities, financing collateral lease deposits in
respect of two further aircraft and strengthening the balance sheet.
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 new
Ordinary Shares in connection with the Placing and the Convertible Loan, will be
posted to Shareholders shortly.
Interim results
Silverjet also announces today its interim results in respect of the six months
ended 30 September 2007. The Company reported a loss before taxation of #13.1m
(2006 #1.1m loss) on revenue of #30.6m (2006 # nil m).
Current trading and prospects
The Directors are very pleased that in August, the month prior to the
commencement of the second flight to New York Newark from London Luton on 23
September, the total Revenue Seats of 4,654 represented a Revenue Load Factor of
80.0 per cent. In October, the first full month of operation of the second
flight, Revenue Seats reached 6,782, an increase of 38.0 per cent. compared to
September, which represented a Revenue Load Factor of 58.5 per cent. Silverjet
has also achieved a significant increase in yield on its Luton to Newark
service.
In the monthly announcement on passenger and traffic statistics on 2 November,
Silverjet reported that forward bookings on both Newark flights were encouraging
and that, in respect of the new Dubai route, which commenced operations on 18
November 2007, the Directors were very encouraged by the forward bookings taken,
and the travel trade and consumer reaction in the UK, US and the Emirates.
Sales of seats to Dubai over the four weeks ended 6 November 2007 represented 21
per cent. of total seats sold. The Directors are pleased by the early positive
trend in yields being achieved on this route.
Finally, the Directors are proud to announce that Silverjet has won the Sunday
Times Travel Award for Best Airline 2007.
The Directors therefore continue to have every confidence in Silverjet's
prospects and continue to anticipate that Silverjet will achieve its first month
of profit in the current financial year ending 31 March 2008.
Background to the Fund Raising
During the six months ended 30 September 2007, Silverjet was adversely impacted
by two issues outside the ordinary course of its core business:
1) On 2 October 2006, Silverjet acquired Skylease and Flyjet to enable it to
commence commercial flights to New York in January 2007 (5 months earlier than
would have been the case in the absence of the acquisition). The service
commenced using a Boeing 767-200 leased by Skylease, and various licences and
certificates held by Flyjet. However, following significant losses being
incurred by Flyjet's charter airline business, Silverjet announced on 8 August
2007 its decision to close the airline, which took effect on 31 October 2007.
2) In addition, Silverjet was required to undertake significant repairs to its
first Boeing 767, which caused the start of the second flight to be delayed from
mid July to 23 September 2007.
Current developments
Silverjet is in final negotiations to sell and lease back, and to fund the
refurbishment and fit out of, two Boeing 767 ER aircraft which it expects to
acquire from Thomsonfly for US $37.0m (#17.9m) in March 2008, in accordance with
the terms of a letter of intent entered into on 1 June 2007. Under these
arrangements, Silverjet expects to be required to place on deposit as collateral
(with interest accruing to Silverjet) US $12.0m (#5.8m) for the two aircraft. US
$10.0m (#4.8m) of the collateral will be released at the rate of US $1.0m
(#0.5m) per aircraft per annum commencing on the fourth anniversary of delivery.
Silverjet has yet to announce the route(s) on which these aircraft will be used.
However, to maintain the quality of the private terminal facility provided to
its passengers at Luton, in light of the planned operation of five flights per
day, the Directors have decided to increase the size of the Luton private
terminal from 10,000 square feet to 27,000 square feet. As previously announced,
Silverjet is also moving to a larger dedicated lounge at Newark, which will
enhance the experience of customers passing through that airport. The Directors
anticipate that the cost of fitting out these two facilities will amount to
approximately #3.0m.
Following the changes to the ATOL announced on 22 October 2007, the Directors
expect Silverjet's collateral deposit of approximately #2.5m in respect thereof
to be released by 31 March 2008. They also expect deposits of approximately
#0.5m with various credit card providers to be released by the same date.
Reasons for the Fund Raising and use of proceeds
On 30 April 2007, Silverjet raised approximately #24.6m from its Shareholders.
In the six months 30 September 2007, approximately #2.0m of these proceeds had
been consumed by the acquisition, operation and closure of Flyjet and #3.4m had
been consumed by costs and diluted revenue relating to the major repairs to its
launch Boeing 767 and the resultant delay in the second service. After excluding
these exceptional items, approximately #9.2m had been consumed by the operating
losses of Silverjet. Cash and restricted deposits at the period end amounted to
#14.5m.
Against this background, the reason for the Fund Raising announced today is to
finance the next phase of Silverjet's growth. The Directors anticipate that
approximately #6.0m of the net proceeds of the Fund Raising will be used to
finance the aircraft lease collateral deposits referred to above, in respect of
the two further Boeing 767 aircraft to be leased, and approximately #3.0m will
be used to fit out the extension to the Luton terminal and the new Newark
lounge. The balance of the net proceeds will therefore be used to strengthen
Silverjet's balance sheet.
Following the Fund Raising the Directors anticipate that Silverjet, based on its
current expansion plans, will, in terms of operating cashflow, be broadly cash
neutral over the remainder of its current financial year ending 31 March 2008
and be cash generative thereafter.
Details of the Placing
Silverjet is proposing to raise #12.0m (gross), through the issue of 20.0m
Placing Shares pursuant to the Placing at 60 pence per Placing Share. Arden
Partners and Kaupthing have conditionally placed the Placing Shares at the
Placing Price with various institutional and other investors.
Arden Partners and Kaupthing have conditionally agreed that, to the extent that
they are unable to procure subscribers for the Placing Shares, they will
subscribe as principal for those Placing Shares they have placed at the Placing
Price.
The Placing Agreement and the issue of the Placing Shares is conditional, inter
alia, upon Shareholder approval and Admission.
The Placing Agreement is also terminable in certain circumstances up until the
time of Admission, including, inter alia, for a material breach of the Company's
obligations under the Placing Agreement, for a material breach of a warranty
contained in the Placing Agreement, or in the event of force majeure or a
material adverse change in the financial condition of the Company. The Placing
Agreement contains various warranties given by the Company with respect to the
business of the Group and certain matters connected with the Placing. In
addition, the Company has given indemnities to Arden Partners and Kaupthing in
connection with the Placing and the performance by Arden Partners and Kaupthing
of services in relation to the Placing.
The Placing Price represents a discount of approximately 21.0 per cent. to the
mid-market closing price of 76.0 pence per Ordinary Share on 21 November 2007,
being the last dealing day prior to the publication of this document. The
Placing Shares represent approximately 24.2 per cent. of the enlarged issued
share capital of the Company following the Placing and assuming full conversion
of the Convertible Loan.
Application will be made to the London Stock Exchange for the Placing Shares to
be admitted to trading on AIM and it is anticipated that dealings in the Placing
Shares will commence on AIM on 18 December 2007.
Details of the Convertible Loan
Silverjet also announces that it has entered into an agreement with TFB, a
Reuben brothers company, under which TFB has agreed to provide to Silverjet a
Convertible Loan of #10.0m, subject to Shareholder approval.
The Convertible Loan is convertible, at the election of TFB, by no later than 11
February 2008, into 18,333,333 new Ordinary Shares. The #1.0m balance of the
aggregate subscription price, such that the price per share amounts to 60 pence,
is payable within six months of conversion.
In the event that TFB elects not to convert the Convertible Loan, it will, with
effect from 11 February 2008, attract interest at LIBOR plus 200 basis points
and be repayable by 17 December 2009.
Upon the conversion of the Convertible Loan and whilst TFB continues to have an
equity interest of no less than 20.0 per cent in the issued Ordinary Shares,
TFB, a Reuben brothers company, shall be entitled to appoint two non-executive
Directors to the Board of the Company.
Subscription by the Directors
The Directors of Silverjet have invested #500,000 in the Placing to subscribe
for 833,332 Placing Shares.
Directorate
Upon the appointment of the two non-executive Directors appointed by TFB,
Silverjet will appoint, following discussions with its major Shareholders, a
third independent non-executive Director.
General
This Announcement is not an offer to sell or issue or the solicitation of an
offer to buy or subscribe for Placing Shares in any jurisdiction in which such
an offer or solicitation is unlawful, and, in particular, is not for publication
or distribution into the United States, Canada, Japan, Australia or South Africa
or in any other jurisdiction where such publication or distribution is unlawful
unless permitted pursuant to an exemption under the relevant local law. The
Placing Shares have not been, nor will be, registered in the United States under
the United States Securities Act of 1933, as amended (the "Securities Act") or
under the securities laws of any state or other jurisdiction of the United
States or the laws of Canada, Japan, Australia or South Africa. Accordingly,
subject to certain exceptions, they may not be offered, or sold, directly or
indirectly, within the United States, Canada, Australia, Japan or South Africa
or to, or for the account of, any person in, or any national, citizen or
resident of, the United States, Canada, Australia, Japan or South Africa. The
distribution of this Announcement outside the United Kingdom may be restricted
by law and therefore persons outside the United Kingdom into whose possession
this Announcement comes, should inform themselves about and observe any
restrictions as to the Placing, the Placing Shares or the distribution of this
Announcement. In particular, persons receiving this Announcement (including,
without limitation, custodians, nominees and trustees) must not distribute,
mail, send or otherwise transmit it in, into or from the United States, or use
the United States mails, directly or indirectly, in connection with the Placing,
and so doing may invalidate any related purported application for Placing
Shares.
Members of the public are not eligible to take part in the Placing. This
Announcement has not been approved by a person authorised under the Financial
Services and Markets Act 2000, as amended ("FSMA") and is directed only at, and
the Placing Shares are only available to, persons who have professional
experience in matters relating to investments falling within Article 19(1) of
the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(the "Order") or persons falling within Article 49(1) of the Order or to whom
this Announcement may otherwise lawfully be communicated and, in any event, are
persons who fall within paragraph (7) of section 86 FSMA (all such persons
together being referred to as "Relevant Persons"). This Announcement must not be
acted on or relied on by persons who are not Relevant Persons. Any investment or
investment activity to which this Announcement relates is available only to
Relevant Persons and will be engaged in only with Relevant Persons. This
Announcement does not constitute an offer for sale or subscription of any
securities in the Company.
Arden Partners and Kaupthing are acting exclusively for the Company in
connection with the Placing and no one else and will not be responsible to
anyone other than the Company for providing the protections afforded to clients
of Arden Partners or Kaupthing nor for providing advice in relation to the
Placing or any transaction or arrangement referred to herein.
Definitions
The following definitions apply throughout the announcement unless the context
requires otherwise:
"Admission" admission of the Placing Shares to trading on AIM and such
admission becoming effective in accordance with Rule 6 of
the AIM Rules
"AIM" AIM, a market of the London Stock Exchange
"AIM Rules for the rules for AIM companies issued by the London Stock
Companies" Exchange (as amended from time to time)
"AIM Rules for the rules for nominated advisers issued by the London Stock
Nominated Advisers" Exchange (as amended from time to time)
"Arden Partners" Arden Partners plc
"ATOL" Air Tour Operator's Licence
"Convertible Loan" the proposed convertible loan of #10.0m as more fully
described in the section entitled "Convertible Loan"
"Directors" or the directors of the Company
"Board"
"Existing Ordinary the 44,444,444 Ordinary Shares in issue at the date of this
Shares" document, all of which are admitted to trading on AIM
"Extraordinary the extraordinary general meeting of the Company to be held
General Meeting" or at 10.00 a.m. on 17 December 2007
"EGM"
"Flyjet" Flyjet Limited
"Kaupthing" Kaupthing Singer & Friedlander Capital Markets Limited
"London Stock London Stock Exchange plc
Exchange"
"Ordinary Shares" ordinary shares of 1 penny each in the capital of the
Company
"Notice of EGM" the notice convening the EGM
"Placing" the proposed placing of the Placing Shares pursuant to the
Placing Agreement
"Placing Agreement" the conditional agreement dated 22 November 2007 between
the Company, Arden Partners and Kaupthing relating to the
Placing
"Placing Price" 60 pence
"Placing Shares" the 20.0m new Ordinary Shares to be issued by the Company
at the Placing Price pursuant to the Placing Agreement
"Resolutions" the resolutions to be tabled at the EGM
"Revenue Load the number of Revenue Seats as a proportion of available
Factor" seats
"Revenue Seats" the aggregate of seats which generate revenue and paying
passengers on non-refundable tickets who have not flown
"Shareholders" holders of Ordinary Shares
"Silverjet" or Silverjet plc
"Company"
"Silverjet Group" or the Company and its subsidiaries
"Group"
"Skylease" Skylease Limited
"TFB" TFB (Mortgages) Limited, a Reuben brothers company
"ThomsonFly" ThomsonFly Limited
"UK" the United Kingdom of Great Britain and Northern Ireland
"United States" or the United States of America, its territories and
"US" possessions, any State of the United States and the
District of Columbia
This information is provided by RNS
The company news service from the London Stock Exchange
END
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