TIDMFJET
RNS Number : 4122T
Fastjet PLC
05 January 2017
THIS ANNOUNCEMENT, INCLUDING THE APPIX, AND THE INFORMATION
CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN, OR REPUBLIC OF SOUTH AFRICA OR
ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
fastjet Plc
("fastjet", the "Company" or the "Group")
5 January 2017
PROPOSED PLACING TO RAISE GROSS PROCEEDS OF NOT LESS THAN
US$28.8m
AGREEMENT WITH SOLENTA AVIATION HOLDINGS LIMITED FOR EQUITY OF
US$19.2M
TRANSACTIONS INCREASE EQUITY BY AT LEAST US$48M
Highlights:
-- Announcement of a conditional agreement with Solenta, a
specialist African commercial aviation group based in Johannesburg,
for the provision and operation of three wet-leased aircraft on a
full ACMI basis and the supply of other services over the next five
years
-- Solenta currently operates 49 aircraft under 5 of its own
African AOCs and has strategic alliances, or AOCs pending, in a
further 7 African countries
-- Solenta has proven experience of providing ACMI/wet-lease
services in Africa and has experience and regulatory approvals in
operating the Embraer aircraft to which fastjet is
transitioning
-- Agreement will see Solenta become a c. 28% shareholder in fastjet
o fastjet has agreed to issue Solenta c. 95.6 million new
ordinary shares to acquire a Solenta group SPV that will own the
right to enter into the three ordinary course wet-leases and to
receive discounts to the value of US$19.2 million on the future
cost of services provided by Solenta
-- fastjet also announces a proposed Placing by way of an
Accelerated Book Build to raise gross proceeds of not less than
US$28.8 million, which is supported by the Company's major
institutional shareholders
-- Issue Price of 16.3 pence per share is a c.2% discount to the closing price on 4 January 2017
-- Together, the Solenta Agreement and the Placing will, the Board believes:
o provide fastjet with the necessary infrastructure and capital
to implement the final stages of its Stabilisation Plan and reach
cash flow break even by Q4 2017
o further improve the cash flow profile of the business going
forward
o allow the Company to leverage Solenta's existing African
business and provide the platform to grow and scale fastjet
flexibly and cost effectively
o provide further working capital to pursue new strategic/growth
opportunities
-- Solenta will have the right to nominate two directors to the
Board of fastjet. The Company also intends to further strengthen
and balance the Board with additional Non-Executive Directors at
the appropriate time.
Nico Bezuidenhout, Interim Chairman and CEO, commented:
"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. As well as helping us to achieve this objective, the
fundraising and Solenta Agreement will also provide the platform
from which to flexibly and cost-effectively pursue fastjet's medium
to long-term objective of becoming the first truly pan-African
low-cost airline."
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation.
Expected timetable of principal events
Event Date
----------------------------------- ----------------
Circular sent to Shareholders 6 January 2016
convening the General meeting
----------------------------------- ----------------
Latest time and date for receipt 10.00 a.m. on 19
of Forms of Proxy for the General January 2017
Meeting
----------------------------------- ----------------
Date and time of General Meeting 10.00 a.m. on 23
January 2017
----------------------------------- ----------------
Admission and commencement of 8.00 a.m. on 24
dealings in the Consideration January 2017
Shares and Placing Shares
----------------------------------- ----------------
CREST accounts credited with New 24 January 2017
Shares
----------------------------------- ----------------
Completion of the Solenta Agreement 24 January 2017
----------------------------------- ----------------
The times and dates set out in the table above and mentioned
throughout this announcement are indicative only and may be
adjusted by the Company (in consultation with Liberum Capital
Limited) with any amendments to the expected timings announced via
a regulatory information service.
For more information, contact:
fastjet Plc Tel: +44 (0) 20
Nico Bezuidenout, Chief Executive 3651 6307
and Acting Chairman
Lisa Mitchell, Chief Financial
Officer
UK media - Citigate Dewe Rogerson Tel: +44 (0) 20
Toby Moore 7638 9571
Eleni Menikou
Nick Hayns
For investor enquiries please
contact:
Liberum Capital Limited - Nominated Tel: +44 (0) 20
Adviser and Broker 3100 2222
Clayton Bush
Christopher Britton
Jill Li
NOTES TO EDITORS
About Fastjet Plc
fastjet Plc is the holding company of the low cost airline
fastjet which commenced flights under the fastjet brand in Tanzania
in November 2012. By adhering to international standards of safety,
quality, security and reliability; fastjet has brought a new flying
experience to the African market at unprecedented low prices.
Utilising a fleet of modern jet aircraft, fastjet has a long term
strategy to implement the low-cost carrier model across Africa to
become the continent's first low-cost, pan-Africa airline.
The results of the second quarter 2016 customer satisfaction
surveys showed that an average of 73% of customers were likely to
recommend fastjet to a friend. In developing its strong brand and
identity, fastjet has won and been nominated for a number of
awards, including Africa's Leading Low-Cost Airline 2016 at the
23rd World Travel Awards, winning three Transform awards for the
rebrand and launch of fastjet, the award for "Brand Strategy of the
Year" at 2014's Drum Marketing Awards in London, and the Transport
Innovator Award at the 8th Transport Africa Awards 2015 in
Johannesburg.
IMPORTANT INFORMATION
This Announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
plans and its current goals and expectations relating to its future
financial condition and performance and which involve a number of
risks and uncertainties. The Company cautions readers that no
forward-looking statement is a guarantee of future performance and
that actual results could differ materially from those contained in
the forward-looking statements. These forward-looking statements
can be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements sometimes
use words such as "aim", "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", or other words of
similar meaning. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances, including, but not limited to, economic and
business conditions, the effects of continued volatility in credit
markets, market-related risks such as changes in the price of
commodities or changes in interest rates and foreign exchange
rates, the policies and actions of governmental and regulatory
authorities, changes in legislation, the further development of
standards and interpretations under International Financial
Reporting Standards (IFRS) applicable to past, current and future
periods, evolving practices with regard to the interpretation and
application of standards under IFRS, the outcome of pending and
future litigation or regulatory investigations, the success of
future explorations, acquisitions and other strategic transactions
and the impact of competition. A number of these factors are beyond
the Company's control. As a result, the Company's actual future
results may differ materially from the plans, goals, and
expectations set forth in the Company's forward-looking statements.
Any forward-looking statements made in this Announcement by or on
behalf of the Company speak only as of the date they are made.
Except as required by the Financial Conduct Authority (the FCA),
the London Stock Exchange or applicable law, the Company expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained in
this Announcement to reflect any changes in the Company's
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
This Announcement is for information purposes only and shall not
constitute an offer to buy, sell, issue, or subscribe for, or the
solicitation of an offer to buy, sell, issue, or subscribe for any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
This Announcement has been issued by and is the sole
responsibility of the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by
Liberum Capital Limited or by any of its affiliates or agents as
to, or in relation to, the accuracy or completeness of this
Announcement or any other written or oral information made
available to or publicly available to any interested party or its
advisers, and any liability therefore is expressly disclaimed.
Liberum, Capital Limited which is authorised and regulated in
the United Kingdom by the FCA, is acting for the Company and for
no-one else in connection with the Placing, and will not be
responsible to anyone other than the Company for providing the
protections afforded to its customers or for providing advice to
any other person in relation to the Placing or any other matter
referred to herein.
The distribution of this Announcement and the offering of the
Placing Shares in certain jurisdictions may be restricted by law.
No action has been taken by the Company or Liberum Capital Limited
that would permit an offering of such shares or possession or
distribution of this Announcement or any other offering or
publicity material relating to such shares in any jurisdiction
where action for that purpose is required. Persons into whose
possession this Announcement comes are required by the Company and
Liberum Capital Limited to inform themselves about, and to observe
such restrictions.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of the Appendix or this Announcement should seek appropriate advice
before taking any action.
The Placing Shares to which this Announcement relates may be
illiquid and / or subject to restrictions on their resale.
Prospective purchasers of the Placing Shares should conduct their
own due diligence on the Placing Shares. If you do not understand
the contents of this Announcement you should consult an authorised
financial adviser.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
The GBP/USD exchange used in respect of the Placing and Solenta
Agreement is 1.2317.
AGREEMENT WITH SOLENTA AVIATION HOLDINGS LIMITED
PROPOSED PLACING TO RAISE GROSS PROCEEDS OF NOT LESS THAN
US$28.8m
Introduction
fastjet, the low cost African airline, is pleased to announce
that it has entered in to a conditional agreement with Solenta
Aviation Holdings Limited, a specialist African aviation aircraft
operator and aircraft services group based in Johannesburg, South
Africa ("Solenta") for the provision and operation of three
wet-leased aircraft and the supply of other services over the next
five years (the "Solenta Agreement"). In conjunction with this, the
Company is pleased to announce a proposed placing, to be conducted
by way of an accelerated book build ("Accelerated Book Build")
process, to raise gross proceeds of not less than US$28.8 million
through the issue of new ordinary shares (the "Placing") at 16.3
pence per new ordinary share (the "Issue Price").
Solenta
Solenta is the holding company of a specialised African
commercial aviation group based in Johannesburg, South Africa. The
Solenta group has been in operation since 2000 and provides a
variety of aviation related services on the African continent
including:
-- Maintenance services, including for the Embraer aircraft type
-- Crew Training services
-- Aircraft Dry leasing
-- Aircraft Wet leasing, including full ACMI services
Solenta has a fleet of 49 aircraft which it operates under AOCs
in Algeria, Cote d'Ivoire, Gabon, Mozambique, and South Africa with
strategic alliances or AOCs pending in Democratic Republic of
Congo, Nigeria, Kenya, Mali, Senegal and Guinea. Solenta is a South
African Civil Aviation Authority approved Aviation Training
Organisation and Aircraft Maintenance Organisation. Major existing
customers include DHL, Worldwide Express, United Nations World Food
Program, ICRC Red Cross, all major oil and gas companies, including
BP, Shell, Total, TFT, Japan Gas, AGIP, Anadarko and ENI, and
Fedair Airlines. Solenta has been consistently profitable for the
last several years.
The Solenta Agreement
The Solenta Agreement provides fastjet with access to aircraft
capacity and related maintenance, crew and insurance services
("ACMI") through leases on ordinary trading terms over the next
five years at a pre-agreed hourly rate. In addition, fastjet will
have the right, subject to approval by the relevant authorities, to
operate the Solenta wet-leased aircraft, and any existing or future
fastjet aircraft, using any of the Solenta group's Air Operator
Certificates ("AOCs") on the African continent under the fastjet
brand. Furthermore, fastjet has an option to acquire an equity
stake in one of Solenta's current or future AOCs on terms to be
agreed and subject to any relevant regulatory restrictions.
Under the terms of the agreement, Solenta has agreed to
recognise US$19.2 million of the aggregate total expected cost of
the three, five year wet-leases as being satisfied immediately on
completion through the issue of 95,633,199 new ordinary shares in
the Company at the Issue Price (the "Consideration Shares").
Solenta will be paid the balance of the payments due under the
wet-leases (including any adjustments) monthly, in cash, as the
services are consumed by fastjet in the ordinary course over the
term of the agreement. To give effect to the above, fastjet has
conditionally agreed (pursuant to the Solenta Agreement) to
acquire, for the Consideration Shares, the entire issued share
capital of Aircraft and Services Limited, an SPV currently held
within the Solenta group, which will have the right to enter into
the wet-leases and to receive discounts to the value of US$19.2
million on the future cost of those and/or other services provided
by Solenta. The Solenta Agreement is conditional upon, inter alia,
the co-terminus completion of the Placing, which is itself subject
to approval by shareholders in a General Meeting of the Company
("General Meeting"), and admission of the Consideration Shares and
the new ordinary shares issued pursuant to the Placing (the
"Placing Shares" and, together with the Consideration Shares, the
"New Shares") to trading on AIM ("Admission").
On Admission, it is expected that Solenta will become a c.28%
shareholder in the Company. Solenta's Consideration Shares will be
subject to certain lock-up and security provisions, as summarised
below, to ensure fastjet's position is protected should Solenta be
unable to deliver the services as agreed. In addition, it has been
agreed that Solenta will enter into a relationship agreement with
fastjet to ensure all transactions and arrangements between the
parties remain on an arms-length basis and subject to normal
commercial terms.
Further information on Solenta and the Solenta Agreement is set
out below.
The Placing
In conjunction with the Solenta Agreement, the Company is
conducting the proposed Placing to provide fastjet with what the
Board believes are the funds necessary to complete the
Stabilisation Plan and reach cash flow break even by Q4 2017. In
addition the funds raised will provide the Company with further
working capital to pursue new strategic and growth opportunities,
in particular expansion of the Company into the South African
market.
The Placing is conditional upon, inter alia, the approval by
shareholders at the General Meeting of the Authorising Resolution
(as defined below) and Admission occurring.
The Company will shortly be publishing a circular (the
"Circular") in connection with the Placing and will be convening
the General Meeting to approve certain matters necessary to
implement the Placing (the "Authorising Resolution").
If Shareholder approval of the Authorising Resolution is not
passed, the Placing will not proceed and the Group is at the risk
of not being able to continue trading as a going concern. If the
Placing does not proceed and complete, and in the absence of the
Group being able to successfully agree or implement any alternative
funding, the Directors would seek to commence a process of placing
the Group into administration. Under such circumstances,
Shareholders could lose all or a substantial amount of the value of
their investment in the Group. Accordingly, the Directors believe
that the successful completion of the Placing represents the best
option available to the Group.
The Company has entered into a placing agreement (the "Placing
Agreement") with Liberum Capital Limited ("Liberum") on customary
terms and conditions pursuant to which Liberum has conditionally
agreed, as agent for the Company, to use its reasonable endeavours
to procure Placees for the Placing Shares at the Issue Price. The
Placing is being conducted by way of an Accelerated Book build led
by Liberum as sole bookrunner ("Bookrunner"). Liberum will receive
its professional fees pursuant to the Placing in the form of new
ordinary shares in the Company at the Issue Price.
The books for the Accelerated Book Build will open with
immediate effect. The books are expected to close no later than
4.00 pm (London) today. The timing of the closing of the books and
the making of allocations may be accelerated or delayed at the
Bookrunner's sole discretion. The Appendix to this Announcement
contains the detailed terms and conditions of the Accelerated Book
Build. The Placing is not being underwritten by Liberum or any
other person. Details of the number of Placing Shares conditionally
placed with institutional and other investors pursuant to the
Placing and gross proceeds will be announced as soon as practicable
after the close of the book building process.
Qualifying investors who are invited, and who choose, to
participate in the Accelerated Book Build by making an oral and
legally binding offer to acquire Placing Shares, will be deemed to
have read and understood this Announcement in its entirety,
including the Appendix, and to be making such offer on the terms
and subject to the conditions contained herein and to be making the
representations, warranties, undertakings and acknowledgements
contained in the Appendix to this Announcement.
The Placing Shares will be issued credited as fully paid and
will rank pari passu with existing ordinary shares of the Company
("Existing Ordinary Shares"), including the right to receive all
dividends and other distributions (if any) declared, made or paid
on or in respect of such shares after the date of their issue.
Your attention is drawn to the detailed terms and conditions of
the Placing described in the Appendix to this announcement (which
forms part of this announcement) (together, the
"Announcement").
Background to the Solenta Agreement and Placing
Nico Bezuidenhout joined the Company as Chief Executive Officer
in August 2016 following a challenging period for fastjet in 2015
and H1 2016 and commenced a thorough review of the business. 2015
was a year of significant change for the Company as its network and
fleet grew rapidly following a US$75m equity fundraising in April
2015. This growth in capacity occurred against a backdrop of
difficult macroeconomic conditions in fastjet's markets
(particularly Tanzania), delays in obtaining flying rights into
Kenya, new international routes performing below expectations, as
well as various changes to executive management and the Board.
Operational performance consequently suffered. The rate of
passenger and revenue growth seen in fastjet's early operations
began to decline and its losses grew as overhead costs increased by
28 per cent., revenue per passenger decreased by 8 per cent. and
load factors decreased by 7 per cent., resulting in an average
monthly loss of c.US$5.0 million by Q4 in 2015. These trends
continued into 2016 and were starkly evident in the Company's H1
2016 results. The doubling of fastjet's fleet in 2015, led to a 61
per cent. increase in seats flown in H1 2016 and a 32 per cent.
decline in load factors, a fall in revenue per passenger of 4 per
cent. and an increase in cost per passenger of 32 per cent. with
only a 9 per cent. increase in passenger numbers. The loss from
continuing activities after tax for H1 2016 was US$31.4 million
compared to US$10.1 million for the same period in 2015.
In the Company's H1 2016 results announced on 20 September 2016,
Mr Bezuidenhout identified the interventions he believed were
required to stabilise the business: immediate cost containment; a
revised business plan designed to stabilise the business and the
introduction of new revenue generating initiatives (collectively,
the "Stabilisation Plan"). Consequently, aggressive measures were
taken to reduce costs in H2 2016: overheads were cut; initiatives
to right size the fleet and aircraft type were implemented; route
expansion was halted and output rationalised in order to achieve
the Company's target of break-even by Q4 2017. The net proceeds of
an US$18.8 million equity fundraising completed immediately prior
to Mr Bezuidenhout arrival in August 2016 and US$7.8m realised from
the sale of fastjet's single owned aircraft allowed the Company to
implement the first steps of this revised business plan.
Update on the Stabilisation Plan
Cost reduction
As announced in the Trading Update of 25 November 2016, progress
has been made with the Stabilisation Plan during H2 2016. As well
as the sale of the owned A-319 aircraft, two leased A-319 aircraft
have been returned early to their lessors and a third aircraft has
now also been decommissioned, leaving two aircraft on legacy leases
in the fleet. A smaller Embraer 190 entered service in October 2016
under a wet lease. The steps taken to rationalise the fleet have
produced initial results of an 11 per cent. reduction in fuel cost,
an 18 percentage point increase in load factor and a 12 per cent.
increase in revenue per passenger and this is expected to result in
a 10-15 per cent. reduction in operating costs for 2017.
An aggressive rationalisation of routes has seen underperforming
routes cut entirely and frequencies reduced on certain loss making
routes. The remaining routes are expected to contribute positively
to operating revenues in December 2016, the peak operating period
for fastjet.
The Directors expect that relocation of the Company's Head
Office function from Gatwick Airport, United Kingdom to
Johannesburg, South Africa will be substantially complete by March
2017 and will give rise to cost savings of approximately 35 per
cent. With the commercial division having left Gatwick and
ex-patriate pilots having left the business in December 2016, the
payroll will reduce by 40 per cent. in January 2017 compared to the
previous month. The finance function will transition to
Johannesburg by March 2017 and operations oversight is expected to
transition in July 2017.
The Company also expects to benefit from having its Head Office
in closer proximity to its operating markets where experienced
financial, commercial and project and governance resources are in
place. Further cost savings are expected from an organisational
restructuring of fastjet's operations in Tanzania and Zimbabwe and
the more costly ex-patriate operational staff are being removed
from the business. Year on year fixed operating costs and overheads
are expected to reduce by approximately 25 per cent. and variable
operating costs by approximately 35 per cent. in Q1 2017.
Revenue Generating Initiatives
New initiatives were introduced in Q4 2016 in a drive to boost
revenue generation. Improving the distribution of fastjet's
services through both trade and direct channels in order to
stimulate revenue growth is a key focus of the Stabilisation Plan.
A new global distribution system ("GDS") was introduced in
September 2016 through Amadeus which allows fastjet to make
available information on its flights, seat availability and other
related information to travel agents and enables comprehensive
information, communication, reservations, distribution, ticketing
and related functions to be performed worldwide. The GDS is used by
travel agents and is expected to improve fastjet's reach as between
an estimated 50 to 75 per cent. of African air travel is booked
through travel agents. The greater level of system connectivity
provided by the GDS will also facilitate the development of
improved interline agreements with International carriers. An
interline agreement with Emirates, one of the world's largest
international airlines, has started to generate passenger flows to
fastjet, and the Directors believe completion of the Placing will
provide the funds necessary to maximise the potential of this
relationship.
The review of fastjet's operations undertaken by Mr Bezuidenhout
has identified that a flexible approach to the traditional low cost
carrier ("LCC") model is more appropriate for the business at its
current stage of development. In June 2016 a new mobile payment
platform with Pesapal was introduced, offering customers a faster
and more convenient means of payment and an estimated 30 per cent.
reduction in fastjet's transaction costs. On 31 March 2016, a new
contact centre in South Africa started operations and is run by
Mindpearl, a business process outsourcer, which provides a
dedicated team to offer customer services to fastjet's passengers.
Greater flexibility is also being introduced into fastjet's pricing
models, for example the through-ticket service connecting various
fastjet routes into single passenger journeys which commenced on 12
September 2016.
There are further initiatives planned to improve the Company's
revenue generation in 2017. fastjet intends to improve its direct
channels of distribution through upgrading its Central Reservations
System by the end of Q1 2017. The Board is also improving the
allocation of its marketing and PR budget in order to more
effectively target fastjet's customer base. New marketing and PR
initiatives which are designed to improve fastjet's market presence
and generate additional revenues have been introduced or are in the
planning stage. fastjet's established social media presence has
proved to be a powerful brand building mechanism. Social media
forms a key part of the Group's improved marketing programme as it
offers a cost-effective promotional channel for generating ticket
sales.
The Company is pleased with the progress made to date in
delivering the Stabilisation Plan. However, the delivery of the
plan has involved certain unexpected delays and more onerous costs
than had originally been anticipated, particularly in respect of
the maintenance costs associated with the return of leased A-319
aircraft (c.US$4.8 million) and additional costs due to regulatory
delays associated with transitioning the fleet to Embraer E-190
aircraft in Tanzania (c.US$2.5 million). A further c.US$2.8 million
of costs are estimated to be payable during 2017 associated with
operating the remaining A-319 aircraft, and has been provided for
in quantifying fastjet's capital requirements for 2017. In
addition, the cost of the corporate reorganisation process has been
higher than anticipated and the Company's creditor balance at the
time of the August 2016 fundraise was c.US$3.2 million higher than
originally expected, combining to place strain on the cash
resources available to the Company and consequently leading to the
requirement to raise additional funds.
As announced on 25 November 2016, the Company needs to raise
further capital to allow it to continue to operate and complete the
implementation of the Stabilisation Plan. Since that announcement
the Company has engaged with new and existing investors in regard
to raising further capital, and has evaluated a number of different
strategic opportunities identified by Mr Bezuidenhout that aim to
either reduce the Company's immediate/near-term capital
requirements and/or facilitate fastjet's growth into new attractive
markets.
The Directors believe the Solenta Agreement, in conjunction with
the Placing, will provide the Company with the necessary
infrastructure and capital to ensure delivery of its existing
strategy to implement the final stages of the Stabilisation Plan
and reach cash flow break even by Q4 2017. However, it will also
allow the Company to think strategically beyond stabilisation as it
looks to grow into new attractive markets, where Mr Bezuidenhout
has significant experience and expertise.
Strategy
The Stabilisation Plan represents a multi-faceted strategic
approach aimed at rapidly reducing cost and sustainably increasing
revenue as it applies to existing fastjet operations, after which
phased growth is to be pursued through organic means as well as
through geographic expansion.
The initial focus on cost-reduction through fleet and route
changes, a relocation of the head-office function and active
supplier-engagements aimed at reducing input-cost, paired with
revenue-enhancing initiatives such as a broadening of the Company's
distribution network, is designed to result in short-term liquidity
improvements and medium-term margin gains. The Board believes that
with a significantly reduced cost base, combined with management
positioned in proximity to its markets and customers under the
supervision of the current CEO, along with a more flexible approach
to operating the traditional LCC model, the existing fastjet
business has a viable and attractive future.
As stability is established, it is intended that the Company's
medium to long term strategy will return towards realising its
vision of becoming a truly pan-African low-cost carrier. With the
relocation of fastjet's headquarters to Johannesburg, the Company
will look to expand its prospects into new markets, firstly South
Africa. South African domestic air traffic accounts for c. 12
million passengers per year and the country is a significantly more
developed aviation market than Tanzania and Zimbabwe, but has
significant ties to them both. On this basis and then given Mr
Bezuidenhout's significant operational experience in the market,
the Board of fastjet believes that aviation in South Africa will
provide fastjet with an attractive opportunity for expansion.
In context of the above the Board believes that the agreement
with Solenta represents a good operational and strategic fit.
Specifically:
-- Solenta has proven expertise in the provisioning of ACMI
services within an African context and has specific experience and
regulatory approvals in operating the Embraer aircraft type,
representing important support considerations for fastjet's own
current fleet transitioning process. Solenta furthermore has
localised maintenance and training capability, supporting fastjet's
ongoing intent as part of the Stabilisation Plan to re-engineer its
supply-chain with a view of improving cost-efficiency and ensuring
improved proximity of supply to operating markets;
-- Solenta's established African footprint may be leveraged to
support expansion of fastjet operations and/or the fastjet brand in
a manner that may be more cost-effective (from a regulatory
compliance standpoint), holds less associated risk and is likely
more expedient;
-- The intended structure of the relationship with Solenta, to
the extent that it involves Solenta assuming an equity position
within fastjet, has the effect of interjecting a strategic
shareholder into fastjet's equity mix whilst simultaneously
reducing cash-outflows from the business as it relates to ACMI
services.
The Solenta Agreement, viewed together with the current capital
raising exercise, consequently serves, in the Board's opinion, to
provide the framework and cash-resources necessary to complete the
Stabilisation Plan, expected to result in a cash-flow breakeven by
Q4 2017, as well as providing enhanced operational capability to
pursue growth opportunities, all in a structure designed to enlarge
fastjet's investor base and manage the risk and cost associated
with expansion.
Further information on the Solenta Agreement
The Solenta Agreement provides fastjet with the option to
wet-lease, on a full ACMI basis in the ordinary course, Solenta
aircraft in fastjet livery over the next five years at a pre-agreed
hourly rate (subject to certain adjustments including, inter alia,
aircraft usage and aircraft type). The Agreement provides
additional flexibility, allowing the substitution of bundled
services for individual service components. Initially the
wet-leased aircraft will be Embraer 145s, which fastjet management
believes are well suited as replacements for the Company's A-319s
on its smaller / shorter routes. In addition, going forward,
fastjet will have the right to request these aircraft be
substituted with Embraer E-190 / E-195s or ATR72-600s, subject to a
fair and reasonable adjustment to the hourly rate. This will give
the Company the opportunity to sub-lease its current A-319s saving
further costs and provide the Company with the flexibility to grow
its capacity in-line with demand as existing routes develop and new
routes are set up.
fastjet will have the right, subject to approval by the relevant
authorities, to deploy the Solenta aircraft on any of the Company's
existing AOCs or deploy these or any other aircraft on any one of
Solenta's AOCs on the African continent under the fastjet brand in
exchange for a cost contribution / revenue share, depending on use.
fastjet's experience in obtaining AOCs to date has shown AOC
applications to be time consuming, uncertain and costly processes.
Consequently, gaining access to Solenta's AOCs will provide the
Company with a flexible and cost-effective method of growing its
brand presence into new markets without being subject to the
regulatory risk and cost associated with AOC approvals and ongoing
maintenance. Moreover, Solenta has also granted fastjet the right
to acquire currently or in the future a stake in an AOC under the
control of Solenta on terms to be agreed, and then subject to
ownership and control restrictions as well as requisite regulatory
approvals, should it be in fastjet's best interests to do so.
Under the terms of the agreement, Solenta has agreed to
recognise US$19.2 million of the aggregate total expected cost of
the three, five year wet-leases as being satisfied immediately on
completion through the issue of the Consideration Shares. Solenta
will be paid the balance of the payments due under the wet-leases
(including any adjustments) monthly, in cash, as the services are
consumed by fastjet in the ordinary course over the term of the
agreement. The Directors believe this is an attractive payment
structure as it will reduce the Company's working capital
requirements over the life of the agreement and provides fastjet
with a supportive new strategic shareholder that has significant
operational experience in the African aviation market.
To give effect to the above, fastjet has conditionally agreed
(pursuant to the Solenta Agreement) to acquire, for the
Consideration Shares, the entire issued share capital of Aircraft
and Services Limited, an SPV currently held within the Solenta
group, which will have the right to enter into the wet-leases and
to receive discounts to the value of US$19.2 million on the future
cost of those and/or other services provided by Solenta. The
Solenta Agreement is conditional upon, inter alia, the co-terminus
completion of the Placing, which is itself subject to approval by
shareholders at the General Meeting and Admission. On Admission,
following receipt of the Consideration Shares, Solenta will become
a c.28% shareholder in the Company.
Solenta Lock-up and Security Provisions
Under the terms of the Solenta Agreement, Solenta's
Consideration Shares will be subject to a lock-up for the shorter
of 9 months from the commencement of the first aircraft wet lease
and 12 months from the date of the Solenta Agreement. On the expiry
of this initial period a number of Consideration Shares will be
released from lock-up but will remain subject to certain orderly
market provisions. The exact number to be released will be
calculated according to certain provisions set out in the Solenta
Agreement that account for levels of usage of agreed services over
the period and changes in the Company's share price. Thereafter,
each quarter further Consideration Shares will be released from the
lock-up (but will also remain subject to certain orderly market
provisions) subject to the same calculation as referred to above as
Solenta provides ACMI services to fastjet. In addition, fastjet
will at all times retain a charge over any unreleased locked-up
Consideration Shares allowing fastjet to regain rights over those
shares, should Solenta default and fail to provide the services as
agreed. The Solenta Agreement contains certain exceptions and
derogations to the lock-up provisions including, inter alia, any
disposal or undertaking given by way of acceptance of a general
offer to acquire the Company or pursuant to a court order, where
the Company goes into liquidation, receivership or appoints an
administrator, where the Company fails to pay Solenta for agreed
and provided services and where the Company's CEO leaves within 36
months of the date of the Solenta Agreement.
Solenta Relationship Agreement
On the basis Solenta will become a c.28% shareholder in the
Company on Admission, the Company and Solenta have agreed to enter
into a relationship agreement at completion pursuant to which
Solenta, in its capacity as a substantial shareholder, will give
various undertakings to the Company to ensure the relationship and
any arrangements between Solenta, its associates and the Company
remain on an arms-length basis / are transacted on normal
commercial terms. So long as Solenta remains interested in more
than 20% of the Company's voting share capital it will retain the
right to nominate two directors to the Board of fastjet. As long as
Solenta remains interested in more than 10% of the Company's voting
share capital (but less than 20%), it will retain the right to
nominate one director to the Board. In both cases, any nomination
will be subject to suitability and appropriateness as determined by
fastjet's Nomad. Should Solenta cease to be a substantial
shareholder, as defined in the AIM Rules, the relationship
agreement shall terminate.
Use of proceeds
The net proceeds of the Placing will be used for working capital
purposes, allowing the Company to complete the Stabilisation Plan
and allow the Board time to implement its previously identified new
revenue generating initiatives and reach cash flow break even by Q4
2017.
In addition, the Placing will provide the Company with further
working capital to enable it to pursue new strategic/growth
opportunities, in particular expansion of the Company into the
South African market.
fastjet Board
Following the resignation of Colin Child as Non-Executive
Chairman announced on 25 November 2016, Nico Bezuidenhout assumed
the role of Interim Chairman, in addition to his role as CEO,
pending the appointment of a new Non-Executive Chairman in due
course. Noting that Solenta will have the right to nominate two
directors to the Board of fastjet, the Company also intends to
further strengthen and balance the Board with additional
Non-Executive Directors at the appropriate time.
Application for Admission to trading on AIM
Application will be made to the London Stock Exchange for the
Consideration Shares and Placing Shares to be admitted to trading
on AIM. It is expected that Admission will become effective and
that dealings for normal settlement in the Consideration Shares and
Placing Shares on AIM will commence at 8.00 a.m. on 24 January
2017.
S
APPIX: TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT, INCLUDING THIS APPIX (TOGETHER, THE
"ANNOUNCEMENT") AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT
FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS
WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND ARE
"QUALIFIED INVESTORS" AS DEFINED IN ARTICLE 2.1(E) OF THE EU
PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES
ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE)
(THE PROSPECTUS DIRECTIVE); AND (B) IN THE UNITED KINGDOM, PERSONS
WHO ARE: (I) "INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF
ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2005 (THE ORDER); (II) PERSONS FALLING
WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC.") OF THE ORDER; OR (III) PERSONS
TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS RELEVANT PERSONS). THIS APPIX AND THE
TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED
ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THIS APPIX AND THE TERMS AND
CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT
PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS
APPIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION
OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER
OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE
UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMED (THE SECURITIES ACT), AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR
AS PART OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. NO OFFERING OF SECURITIES IS
BEING MADE IN THE UNITED STATES. NO MONEY, SECURITIES OR OTHER
CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING
SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN
THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING
SHARES.
Persons who are invited to and who choose to participate in the
Placing, by making (or on whose behalf there is made) an oral or
written offer to subscribe for Placing Shares (the Placees), will
be deemed to have read and understood this Announcement, including
this Appendix, in its entirety and to be making such offer on the
terms and conditions, and to be providing the representations,
warranties, acknowledgements, and undertakings contained in this
Appendix. In particular each such Placee represents, warrants and
acknowledges to the Company and the Bookrunner that:
1. it is a Relevant Person (as defined above) and undertakes
that it will acquire, hold, manage or dispose of any Placing Shares
that are allocated to it for the purposes of its business;
2. in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the Placing Shares acquired by it in the
Placing have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Member State of the European Economic Area which has implemented
the Prospectus Directive other than Qualified Investors or in
circumstances in which the prior consent of the Bookrunner has been
given to the offer or resale; or (ii) where Placing Shares have
been acquired by it on behalf of persons in any member state of the
EEA other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Directive as
having been made to such persons; and
3. either:(a) (i) it is not in the United States, and (ii) it is
not acting for the account or benefit of a person in the United
States; (b) it is a dealer or other professional fiduciary in the
United States acting on a discretionary basis for a non-US person
(other than an estate or trust) in reliance on Regulation S; or (c)
it is otherwise acquiring the Placing Shares in an "offshore
transaction" meeting the requirements of Regulation S under the
Securities Act.
The Company and the Bookrunner will rely upon the truth and
accuracy of the foregoing representations, acknowledgements and
agreements.
This Announcement does not constitute an offer, and may not be
used in connection with 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 offer or solicitation is or may be
unlawful. This Announcement and the information contained herein is
not for publication or distribution, directly or indirectly, to
persons in the United States, Australia, Canada, Japan or the
Republic of South Africa or in any other jurisdiction in which such
publication or distribution is unlawful. Persons into whose
possession this Announcement may come are required by the Company
to inform themselves about and to observe any restrictions of
transfer of this Announcement. No public offer of securities of the
Company is being made in the United Kingdom, the United States or
elsewhere.
In particular, the Placing Shares referred to in this
Announcement have not been and will not be registered under the
Securities Act or any laws of or with any securities regulatory
authority of any state or other jurisdiction of the United States,
and may not be offered, sold, pledged or otherwise transferred
within the United States except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and the securities laws of any state or other
jurisdiction of the United States. The Placing Shares are being
offered and sold only outside the United States in accordance with
Regulation S.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with or
registered by the Australian Securities and Investments Commission
or the Japanese Ministry of Finance or the South African Reserve
Bank; and the Placing Shares have not been, nor will they be,
registered under or offered in compliance with the securities laws
of any state, province or territory of Australia, Canada, Japan or
the Republic of South Africa. Accordingly, the Placing Shares may
not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or
indirectly, in or into Australia, Canada, Japan or the Republic of
South Africa or any other jurisdiction outside the United
Kingdom.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix or the Announcement of which it forms part should
seek appropriate advice before taking any action.
In this Appendix, unless the context otherwise requires,
"Placee" means a Relevant Person (including individuals, funds or
others) on whose behalf a commitment to subscribe for Placing
Shares has been given.
Details of the Placing Agreement and the Placing Shares
Liberum has entered into the Placing Agreement with the Company
under which Liberum has conditionally agreed on the terms and
subject to the conditions set out therein, as agent for the
Company, to use its reasonable endeavours to place the Placing
Shares at the Issue Price with certain institutional investors. The
Placing is not being underwritten by Liberum or any other
person.
The number of Placing Shares at the Issue Price will be
determined following completion of the Accelerated Book Build as
set out in this Announcement.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends and other
distributions (if any) declared, made or paid on or in respect of
the Existing Ordinary Shares after the date of issue of the Placing
Shares.
Application for admission to trading
Application will be made for admission of the Placing Shares to
trading on AIM. It is expected that settlement of any such shares
and Admission will become effective on or around 8.00 am on 24
January 2017 and that dealings in the Placing Shares will commence
at that time.
Accelerated Book Build
The Bookrunner will today commence an Accelerated Book Building
process in respect to the Placing to determine demand for
participation in the Placing by any Placees at the Issue Price.
This Appendix gives details of the terms and conditions of, and the
mechanics of participation in, the Accelerated Book Build. No
commissions will be paid to Placees or by Placees in respect of any
Placing Shares.
The Bookrunner and the Company shall be entitled to effect the
Placing (in whole or in part) by such alternative method to the
Accelerated Book Build as they may, in their sole discretion,
determine.
Participation in, and principal terms of, the Placing
1. The Bookrunner is arranging the Accelerated Book Build and
Placing as an agent of the Company.
2. Participation in the Accelerated Book Build will only be
available to persons who may lawfully be, and are, invited to
participate by the Bookrunner. The Bookrunner and its affiliates
are entitled to enter bids in the Accelerated Book Build as
principal.
3. The Accelerated Book Build will establish the number of
Placing Shares to be issued at the Issue Price, which will be
agreed between the Bookrunner and the Company following completion
of the Accelerated Book Build. The number of Placing Shares will be
announced on a Regulatory Information Service following the
completion of the Accelerated Book Build.
4. To bid in the Accelerated Book Build, prospective Placees
should communicate their bid by telephone to their usual sales
contact at Liberum. Each bid should state the number of Placing
Shares which the prospective Placee wishes to subscribe for at the
Issue Price. Bids may be scaled down by the Bookrunner on the basis
referred to paragraph 8 below.
5. The Accelerated Book Build is expected to close no later than
4.00 pm (London) today but may be closed earlier or later at the
discretion of the Bookrunner. The Bookrunner may, in agreement with
the Company, accept bids that are received after the Accelerated
Book Build has closed.
6. Each Placee's allocation will be confirmed to Placees orally,
or by email, by the Bookrunner whom they contact following the
close of the Accelerated Book Build and a trade confirmation or
contract note will be dispatched as soon as possible thereafter. A
Bookrunner's oral or emailed confirmation to such Placee will
constitute an irrevocable legally binding commitment upon such
person (who will at that point become a Placee) in favour of the
Bookrunner and the Company, under which it agrees to subscribe for
the number of Placing Shares allocated to it at the Issue Price on
the terms and conditions set out in this Appendix (which are deemed
to be incorporated in such trade confirmation or contract note) and
in accordance with the Company's Articles of Association.
7. The Company will make a further announcement following the
close of the Accelerated Book Build detailing the number of Placing
Shares to be issued at the Issue Price.
8. Subject to paragraphs 4 and 5 above, the Bookrunner may
choose to accept or reject bids, either in whole or in part, on the
basis of allocations determined at its discretion (in consultation
with the Company) and may scale down any bids for this purpose on
such basis as they may determine. The Bookrunner may also,
notwithstanding paragraphs 4 and 5 above, subject to the prior
consent of the Company: (i) allocate Placing Shares after the time
of any initial allocation to any person submitting a bid after that
time; and (ii) allocate Placing Shares after the Accelerated Book
Build has closed to any person submitting a bid after that
time.
9. A bid in the Accelerated Book Build will be made on the terms
and subject to the conditions in this Announcement and will be
legally binding on the Placee on behalf of which it is made and,
except with the consent of the Bookrunner, will not be capable of
variation or revocation after the time at which it is submitted.
Each Placee will also have an immediate, separate, irrevocable and
binding obligation, owed to the Bookrunner, to pay to the
Bookrunner (or as the Bookrunner may direct) in cleared funds an
amount equal to the product of the Issue Price and the number of
Placing Shares for which such Placee has agreed to subscribe. Each
Placee's obligations will be owed to the Bookrunner.
10. Except as required by law or regulation, no press release or
other announcement will be made by the Bookrunner or the Company
using the name of any Placee (or its agent), in its capacity as
Placee (or agent), other than with such Placee's prior written
consent.
11. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
12. All obligations under the Accelerated Book Build and Placing
will be subject to fulfilment of the conditions referred to below
under "Conditions of the Placing" and to the Placing not being
terminated on the basis referred to below under "Right to terminate
under the Placing Agreement".
13. By participating in the Accelerated Book Build, each Placee
agrees that its rights and obligations in respect of the Placing
will terminate only in the circumstances described below and will
not be capable of rescission or termination by the Placee.
14. To the fullest extent permissible by law and the applicable
rules of the FCA, neither Liberum nor any of its affiliates shall
have any liability to Placees (or to any other person whether
acting on behalf of a Placee or otherwise whether or not a
recipient of these terms and conditions) in respect of the Placing.
Each Placee acknowledges and agrees that the Company is responsible
for the allotment of the Placing Shares to the Placees and the
Bookrunner shall have no liability to the Placees for the failure
of the Company to fulfil those obligations. In particular, neither
Liberum nor any of its affiliates shall have any liability
(including to the extent permissible by law, any fiduciary duties)
in respect of the Bookrunner's conduct of the Accelerated Book
Build or of such alternative method of effecting the Placing (in
whole or in part) as the Bookrunner and the Company may agree.
Conditions of the Placing
Completion of the Placing is conditional on, inter alia:
(a) the issue of the Circular by the Company by 5.00 p.m. on 6 January 2017
(b) the passing of the Authorising Resolution (without
amendment) by shareholders in a general meeting of the Company;
(c) the Company having complied with its obligations under the
Placing Agreement to the extent that such obligations fall to be
performed prior to Admission;
(d) none of the warranties in the Placing Agreement being
untrue, inaccurate or misleading;
(e) the Placing Agreement not having been terminated in accordance with its terms; and
(f) Admission becoming effective by no later than 8.00 a.m. on
24 January 2017 (or such later time and/or date as the Company and
the Bookrunner may agree (being not later than 8.00 a.m. on 31
January 2017).
If: (i) any of the conditions contained in the Placing Agreement
in relation to the Placing Shares are not fulfilled or waived by
the Bookrunner by the respective time or date where specified (or
such later time or date as the Company and the Bookrunner may
agree, but not being later than 8.00 am on 31 January 2017); (ii)
any of such conditions becomes incapable of being fulfilled; or
(iii) the Placing Agreement is terminated in its entirety in the
circumstances specified below, the Placing will lapse and the
Placee's rights and obligations hereunder in relation to the
Placing Shares shall cease and terminate at such time and each
Placee agrees that no claim can be made by the Placee against the
Bookrunner in respect thereof.
The Bookrunner may, at its discretion and upon such terms as it
thinks fit, waive, or extend the period for, compliance by the
Company with the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement
save that the above condition relating to Admission taking place
may not be waived. Any such extension or waiver will not affect
Placees' commitments as set out in this Announcement.
Neither Liberum nor the Company shall have any liability to any
Placee (or to any other person whether acting on behalf of a Placee
or otherwise) in respect of any decision they may make as to
whether or not to waive or to extend the time and/or date for the
satisfaction of any condition to the Placing nor for any decision
they may make as to the satisfaction of any condition or in respect
of the Placing generally and by participating in the Placing, each
Placee agrees that any such decision is within the absolute
discretion of the Bookrunner.
Right to terminate under the Placing Agreement
The Bookrunner is entitled, at any time before Admission, to
terminate its obligations under the Placing Agreement by giving
notice to the Company in certain circumstances, including, inter
alia:
(a) a breach of the warranties given by the Company in the Placing Agreement; or
(b) a material breach by the Company of any of its obligations
under the Placing Agreement; or
(c) in the Bookrunner's opinion, there having been a material
adverse change in the financial position, business or prospects of
the Group; or
(d) the occurrence of a force majeure event which, in the
opinion of the Bookrunner, makes it impractical or inadvisable to
proceed with the Placing.
Following Admission, the Placing Agreement is not capable of
termination to the extent that it relates to the Placing of the
Placing Shares. The rights and obligations of the Placees shall
terminate only in the circumstances described in these terms and
conditions and will not be subject to termination by the Placee or
any prospective Placee at any time or in any circumstances. By
participating in the Placing, Placees agree that the exercise by
the Bookrunner of any right of termination or other discretion
under the Placing Agreement shall be within the absolute discretion
of the Bookrunner, and that it need not make any reference to
Placees and that it shall have no liability to Placees whatsoever
in connection with any such exercise.
No Prospectus
The Placing Shares are being offered to a limited number of
specifically invited persons only and will not be offered in such a
way as to require a prospectus in the United Kingdom or in any
other jurisdiction. No offering document, admission document or
prospectus has been or will be submitted to be approved by the FCA
in relation to the Placing, and any Placees' commitments will be
made solely on the basis of the information contained in the
Announcement (including this Appendix) and the Exchange Information
(as defined further below).
Each Placee, by accepting a participation in the Placing, agrees
that the content of this Announcement is exclusively the
responsibility of the Company and confirms that it has neither
received nor relied on any other information (other than the
Exchange Information), representation, warranty, or statement made
by or on behalf of the Company or Liberum or any other person and
neither the Bookrunner nor the Company nor any other person will be
liable for any Placee's decision to participate in the Placing
based on any other information, representation, warranty or
statement which the Placees may have obtained or received and, if
given or made, such information, representation, warranty or
statement must not be relied upon as having been authorised by any
of the Bookrunner, the Company, or their respective officers,
directors, employees or agents.
Each Placee acknowledges and agrees that it has relied on its
own investigation of the business, financial or other position of
the Company in accepting a participation in the Placing. Neither
the Company nor the Bookrunner is making any undertaking or
warranty to any Placee regarding the legality of an investment in
the Placing Shares by such Placee under any legal, investment or
similar laws or regulations. Each Placee should not consider any
information in this Announcement to be legal, tax or business
advice. Each Placee should consult its own solicitor, tax adviser
and financial adviser for independent legal, tax and financial
advice regarding an investment in the Placing Shares. Nothing in
this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN:
GB00BWGCH354) following Admission will take place within the system
administered by Euroclear UK & Ireland Limited (CREST) provided
that, subject to certain exceptions, the Bookrunner reserves the
right to require settlement for, and delivery of, the Placing
Shares (or a portion thereof) to Placees by such other means that
they deem necessary if delivery or settlement is not possible or
practicable within CREST within the timetable set out in this
Announcement or would not be consistent with the regulatory
requirements in any Placee's jurisdiction.
Following the close of the Accelerated Book Build, each Placee
allocated Placing Shares in the Placing will be sent a trade
confirmation or contract note in accordance with the standing
arrangements in place with the Bookrunner, stating the number of
Placing Shares allocated to it at the Issue Price, the aggregate
amount owed by such Placee to the Bookrunner (in GBP) and
settlement instructions. Each Placee agrees that it will do all
things necessary to ensure that delivery and payment is completed
in accordance with either the standing CREST or certificated
settlement instructions that it has in place with the
Bookrunner.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two (2) percentage points above LIBOR as
determined by the Bookrunner.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the Bookrunner may sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and
retain from the proceeds, for the Bookrunner's account and benefit
(as agent for the Company), an amount equal to the aggregate amount
owed by the Placee plus any interest due. The relevant Placee will,
however, remain liable for any shortfall below the aggregate amount
owed by it and may be required to bear any stamp duty or stamp duty
reserve tax or securities transfer tax (together with any interest
or penalties) which may arise upon the sale of such Placing Shares
on such Placee's behalf. By communicating a bid for Placing Shares,
each Placee confers on the Bookrunner all such authorities and
powers necessary to carry out any such sale and agrees to ratify
and confirm all actions which the Bookrunner lawfully takes in
pursuance of such sale.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the trade confirmation
or contract note is copied and delivered immediately to the
relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or
that of its nominee or in the name of any person for whom a Placee
is contracting as agent or that of a nominee for such person, such
Placing Shares should, subject as provided below, be so registered
free from any liability to UK stamp duty or stamp duty reserve tax
or securities transfer tax. Placees will not be entitled to receive
any fee or commission in connection with the Placing.
Representations, Warranties and Further Terms
By participating in the Placing each Placee (and any person
acting on such Placee's behalf) makes the following
representations, warranties, acknowledgements, agreements and
undertakings (as the case may be) to the Company and the
Bookrunner:
1. represents and warrants that it has read and understood this
Announcement, including the Appendix, in its entirety and that its
subscription for Placing Shares is subject to and based upon all
the terms, conditions, representations, warranties,
acknowledgements, agreements and undertakings and other information
contained herein and undertakes not to redistribute or duplicate
this Announcement;
2. acknowledges that no offering document, admission document or
prospectus has been prepared in connection with the Placing and
represents and warrants that it has not received and will not
receive a prospectus, admission document or other offering document
in connection therewith;
3. acknowledges that the Existing Ordinary Shares are admitted
to trading on AIM, and the Company is therefore required to publish
certain business and financial information in accordance with the
AIM Rules (collectively "Exchange Information");
4. acknowledges that none of Liberum, the Company, any of their
respective affiliates or any person acting on behalf of any of them
has provided, and will not provide it, with any material regarding
the Placing Shares or the Company other than this Announcement; nor
has it requested any of Liberum, the Company, any of their
respective affiliates or any person acting on behalf of any of them
to provide it with any such information;
5. acknowledges that the content of this Announcement is
exclusively the responsibility of the Company, and that none of
Liberum, their respective affiliates or any person acting on behalf
of any of them has or shall have any liability for any information,
representation or statement contained in this Announcement or any
information previously or concurrently published by or on behalf of
the Company, and will not be liable for any Placee's decision to
participate in the Placing based on any information, representation
or statement contained in this Announcement or otherwise. Each
Placee further represents, warrants and agrees that the only
information on which it is entitled to rely and on which such
Placee has relied in committing itself to acquire the Placing
Shares is contained in this Announcement and any Exchange
Information, such information being all that it deems necessary to
make an investment decision in respect of the Placing Shares and
that it has neither received nor relied on any other information
given or
representations, warranties or statements made by any of Liberum
or the Company, or, if received, it has not relied upon any such
information, representations, warranties or statements (including
any management presentation that may have been received by any
prospective Placee) and neither Liberum nor the Company will be
liable for any Placee's decision to accept an invitation to
participate in the Placing based on any other information,
representation, warranty or statement. Each Placee further
acknowledges and agrees that it has relied solely on its own
investigation of the business, financial or other position of the
Company in deciding to participate in the Placing and it will not
rely on any investigation that Liberum, its affiliates or any
person acting on behalf of any of them has or may have
conducted;
6. represents and warrants that it has neither received nor
relied on any unpublished price sensitive information concerning
the Company in accepting this invitation to participate in the
Placing;
7. acknowledges that none of Liberum, its affiliates or any
person acting on behalf of any of them has or shall have any
liability for the Exchange Information, any publicly available or
filed information or any representation relating to the Company,
provided that nothing in this paragraph excludes the liability of
any person for fraudulent misrepresentation made by that
person;
8. represents and warrants that: (a) (i) it is not in the United
States, and (ii) it is not acting for the account or benefit of a
person in the United States; (b) it is a dealer or other
professional fiduciary in the United States acting on a
discretionary basis for a non-US person (other than an estate or
trust) in reliance on Regulation S; or (c) it is otherwise
acquiring the Placing Shares in an "offshore transaction" meeting
the requirements of Regulation S under the Securities Act;
9. acknowledges that it is acquiring the Placing Shares for its
own account or for one or more accounts as to each of which it
exercises sole investment discretion, for investment purposes and
not with a view to any distribution or for resale in connection
with, the distribution thereof in whole or in part, in the United
States and that it has full power to make the acknowledgements,
representations and agreements herein on behalf of each such
account;
10. acknowledges that the Placing Shares have not been and will
not be registered under the Securities Act or with any state or
other jurisdiction of the United States, nor approved or
disapproved by the US Securities and Exchange Commission, any state
securities commission in the United States or any other United
States regulatory authority, and agrees not to reoffer, resell,
pledge or otherwise transfer the Placing Shares except pursuant to
an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act;
11. unless otherwise specifically agreed in writing with
Liberum, represents and warrants that neither it nor the beneficial
owner of such Placing Shares will be a resident of the United
States, Australia, Canada, Japan or the Republic of South
Africa;
12. acknowledges that the Placing Shares have not been and will
not be registered under the securities legislation of the United
States, Australia, Canada, Japan or the Republic of South Africa
and, subject to certain exceptions, may not be offered, sold, taken
up, renounced or delivered or transferred, directly or indirectly,
within those jurisdictions;
13. represents and warrants that the issue to it, or the person
specified by it for registration as holder, of Placing Shares will
not give rise to a liability under any of sections 67, 70, 93 or 96
of the Finance Act 1986 (depositary receipts and clearance
services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depositary receipts or to
transfer Placing Shares into a clearance system;
14. represents and warrants that: (i) it has complied with its
obligations in connection with money laundering and terrorist
financing under the Proceeds of Crime Act 2002, the Terrorism Act
2000 (as amended), the Terrorism Act 2006 and the Money Laundering
Regulations 2007 and (ii) it is not a person: (a) with whom
transactions are prohibited under the Foreign Corrupt Practices Act
of 1977 or any economic sanction programmes administered by, or
regulations promulgated by, the Office of Foreign Assets Control of
the U.S. Department of the Treasury; (b) named on the Consolidated
List of Financial Sanctions Targets maintained by HM Treasury of
the United Kingdom; or (c) subject to financial sanctions imposed
pursuant to a regulation of the European Union or a regulation
adopted by the United Nations (together, the Regulations); and, if
making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and, if
making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and has
obtained all governmental and other consents (if any) which may be
required for the purpose of, or as a consequence of, such purchase,
and it will provide promptly to the Bookrunner such evidence, if
any, as to the identity or location or legal status of any person
which the Bookrunner may request from it in connection with the
Placing (for the purpose of complying with such Regulations or
ascertaining the nationality of any person or the jurisdiction(s)
to which any person is subject or otherwise) in the form and manner
requested by the Bookrunner on the basis that any failure by it to
do so may result in the number of Placing Shares that are to be
purchased by it or at its direction pursuant to the Placing being
reduced to such number, or to nil, as the Bookrunner may decide at
its sole discretion;
15. if a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, represents and warrants that the
Placing Shares purchased by it in the Placing will not be acquired
on a non-discretionary basis on behalf of, nor will they be
acquired with a view to their offer or resale to, persons in a
Member State of the European Economic Area which has implemented
the Prospectus Directive other than Qualified Investors, or in
circumstances in which the prior consent of the Bookrunner has been
given to the offer or resale;
16. represents and warrants that it has not offered or sold and,
prior to the expiry of a period of six (6) months from Admission,
will not offer or sell any Placing Shares to persons in the United
Kingdom, except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or otherwise
in circumstances which have not resulted and which will not result
in an offer to the public in the United Kingdom within the meaning
of section 85(1) of the Financial Services and Markets Act 2000
(FSMA);
17. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the
European Economic Area prior to Admission except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes
of their business or otherwise in circumstances which have not
resulted in and which will not result in an offer to the public in
any member state of the European Economic Area within the meaning
of the Prospectus Directive;
18. represents and warrants that it has only communicated or
caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the FSMA) relating to
the Placing Shares in circumstances which do not require the
approval of the communication by an authorised person under section
21(1) of the FSMA;
19. represents and warrants that it has complied and will comply
with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Placing Shares in, from or otherwise
involving, the United Kingdom;
20. if in a Member State of the European Economic Area, unless
otherwise specifically agreed with Liberum in writing, represents
and warrants that it is a Qualified Investor within the meaning of
the Prospectus Directive;
21. if in the United Kingdom, represents and warrants that it is
a person: (i) who is an investment professionals within the meaning
of article 19(5) of the Order; (ii) who falls within Article
49(2)(A) to (D) ("High Net Worth Companies, Unincorporated
Associations, etc.") of the Order; or (iii) to whom this
Announcement may otherwise be lawfully communicated;
22. represents and warrants that it and any person acting on its
behalf is entitled to acquire the Placing Shares under the laws of
all relevant jurisdictions and that it has all necessary capacity
and has obtained all necessary consents and authorities and taken
any other necessary actions to enable it to commit to this
participation in the Placing and to perform its obligations in
relation thereto (including, without limitation, in the case of any
person on whose behalf it is acting, all necessary consents and
authorities to agree to the terms set out or referred to in this
Announcement) and will honour such obligations;
23. where it is acquiring Placing Shares for one or more managed
accounts, represents and warrants that it is authorised in writing
by each managed account: (a) to acquire the Placing Shares for each
managed account; (b) to make on its behalf the representations,
warranties, acknowledgements, undertakings and agreements in this
Appendix and the Announcement of which it forms part; and (c) to
receive on its behalf any investment letter relating to the Placing
in the form provided to you by the Bookrunner;
24. undertakes that it (and any person acting on its behalf)
will make payment for the Placing Shares allocated to it in
accordance with this Announcement on the due time and date set out
herein, failing which the relevant Placing Shares may be placed
with other subscribers or sold as the Bookrunner may in its sole
discretion determine and without liability to such Placee and it
will remain liable for any shortfall below the net proceeds of such
sale and the placing proceeds of such Placing Shares and may be
required to bear the liability for any stamp duty or stamp duty
reserve tax or security transfer tax (together with any interest or
penalties due pursuant to or referred to in these terms and
conditions) which may arise upon the placing or sale of such
Placee's Placing Shares on its behalf;
25. acknowledges that none of Liberum, its affiliates, or any
person acting on behalf of any of them, is making any
recommendations to it, advising it regarding the suitability of any
transactions it may enter into in connection with the Placing and
that participation in the Placing is on the basis that it is not
and will not be treated for these purposes as a client of Liberum
and that Liberum has no duties or responsibilities to it for
providing the protections afforded to its clients or customers or
for providing advice in relation to the Placing nor in respect of
any representations, warranties, undertakings or indemnities
contained in the Placing Agreement nor for the exercise or
performance of any of its rights and obligations thereunder
including any rights to waive or vary any conditions or exercise
any termination right;
26. undertakes that the person whom it specifies for
registration as the holder of the Placing Shares will be (i) itself
or (ii) its nominee, as the case may be. None of Liberum nor the
Company will be responsible for any liability to stamp duty or
stamp duty reserve tax resulting from a failure to observe this
requirement. Each Placee and any person acting on behalf of such
Placee agrees to participate in the Placing and it agrees to
indemnify the Company, Liberum in respect of the same on the basis
that the Placing Shares will be allotted to the CREST stock account
of Liberum who will hold them as nominee on behalf of such Placee
until settlement in accordance with its standing settlement
instructions;
27. acknowledges that these terms and conditions and any
agreements entered into by it pursuant to these terms and
conditions shall be governed by and construed in accordance with
the laws of England and Wales and it submits (on behalf of itself
and on behalf of any person on whose behalf it is acting) to the
exclusive jurisdiction of the English courts as regards any claim,
dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Company or Liberum in any
jurisdiction in which the relevant Placee is incorporated or in
which any of its securities have a quotation on a recognised stock
exchange;
28. acknowledges that time shall be of the essence as regards to
obligations pursuant to this Appendix to the Announcement;
29. agrees that the Company, Liberum, and their respective
affiliates and others will rely upon the truth and accuracy of the
foregoing representations, warranties, acknowledgements and
undertakings which are given to the Bookrunner on their own behalf
and on behalf of the Company and are irrevocable and are
irrevocably authorised to produce this Announcement or a copy
thereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered
hereby;
30. agrees to indemnify on an after-tax basis and hold the
Company, Liberum and their respective affiliates harmless from any
and all costs, claims, liabilities and expenses (including legal
fees and expenses) arising out of or in connection with any breach
of the representations, warranties, acknowledgements, agreements
and undertakings in this Appendix and further agrees that the
provisions of this Appendix shall survive after completion of the
Placing;
31. acknowledges that no action has been or will be taken by any
of the Company, Liberum or any person acting on behalf of the
Company or Liberum that would, or is intended to, permit a public
offer of the Placing Shares in any country or jurisdiction where
any such action for that purpose is required;
32. acknowledges that it is an institution that has knowledge
and experience in financial, business and international investment
matters as is required to evaluate the merits and risks of
subscribing for the Placing Shares. It further acknowledges that it
is experienced in investing in securities of this nature and is
aware that it may be required to bear, and it, and any accounts for
which it may be acting, are able to bear, the economic risk of, and
is able to sustain, a complete loss in connection with the Placing.
It has relied upon its own examination and due diligence of the
Company and its associates taken as a whole, and the terms of the
Placing, including the merits and risks involved; and
33. acknowledges that its commitment to subscribe for Placing
Shares on the terms set out herein and in the trade confirmation or
contract note will continue notwithstanding any amendment that may
in future be made to the terms of the Placing and that Placees will
have no right to be consulted or require that their consent be
obtained with respect to the Company's conduct of the Placing.
The representations, warranties, acknowledgments and
undertakings contained in this Appendix are given to the Bookrunner
for itself and on behalf of the Company and are irrevocable.
The agreement to settle a Placee's subscription (and/or the
subscription of a person for whom such Placee is contracting as
agent) free of stamp duty and stamp duty reserve tax depends on the
settlement relating only to a subscription by it and/or such person
direct from the Company for the Placing Shares in question. Such
agreement assumes that the Placing Shares are not being subscribed
for in connection with arrangements to issue depositary receipts or
to transfer the Placing Shares into a clearance service. If there
are any such arrangements, or the settlement relates to any other
subsequent dealing in the Placing Shares, stamp duty or stamp duty
reserve tax may be payable, for which neither the Company nor
Liberum will be responsible, and the Placee to whom (or on behalf
of whom, or in respect of the person for whom it is participating
in the Placing as an agent or nominee) the allocation, allotment,
issue or delivery of Placing Shares has given rise to such UK stamp
duty or stamp duty reserve tax undertakes to pay such UK stamp duty
or stamp duty reserve tax forthwith and to indemnify on an
after-tax basis and to hold harmless the Company and Liberum in the
event that any of the Company and/or Liberum has incurred any such
liability to UK stamp duty or stamp duty reserve tax. If this is
the case, each Placee should seek its own advice and notify the
Bookrunner accordingly.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable outside the
UK by them or any other person on the subscription by them of any
Placing Shares or the agreement by them to subscribe for any
Placing Shares.
Each Placee, and any person acting on behalf of the Placee,
acknowledges that the Bookrunner does not owe any fiduciary or
other duties to any Placee in respect of any representations,
warranties, undertakings or indemnities in the Placing
Agreement.
Each Placee and any person acting on behalf of the Placee
acknowledges and agrees that Liberum or any of its affiliates may,
at their absolute discretion, agree to become a Placee in respect
of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is
dealing with the Bookrunner, any money held in an account with the
Bookrunner on behalf of the Placee and/or any person acting on
behalf of the Placee will not be treated as client money within the
meaning of the rules and regulations of the FCA made under the
FSMA. The Placee acknowledges that the money will not be subject to
the protections conferred by the client money rules; as a
consequence, this money will not be segregated from the
Bookrunner's money in accordance with the client money rules and
will be used by the Bookrunner in the course of their own business
and the Placee will rank only as a general creditor of the
Bookrunner.
All times and dates in this Announcement may be subject to
amendment. The Bookrunner shall notify the Placees and any person
acting on behalf of the Placees of any changes.
-end-
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGMGGMRKDGNZG
(END) Dow Jones Newswires
January 05, 2017 03:30 ET (08:30 GMT)
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