Middle East investor to back Silverjet with up to $100m
30.04.08
An unnamed United Arab Emirates based investor is to inject up to $100 million into Luton Airport based all business class airline Silverjet to help the airline expand whilst it also deals with increased fuel costs, a weakening economic climate and a tightening of credit conditions in the airline industry.
The airline has entered into a memorandum of understanding with the investor to initially provide around $25 million (£12.7 million) by means of debt and equity. The airline said the investment will boost its working capital, which has deteriorated, and will also help its ‘limited’ residual reserves.
A spokesman said the $8 million equity element will be subscribed at 17 pence per share (giving the investor a 28 percent stake in the airline) and that a debt facility will be made available to the company imminently. Upon completing the deal, the investor will appoint two representatives to Silverjet’s Board of Directors.
Under the deal, the investor has also set out its intention to provide up to a further $75 million (£38.1 million) to help the planned development of Silverjet. This will be used to assist the international rollout of the Silverjet brand into new markets within the Middle East, the Far East and Africa.
The airline said in a statement this morning: ‘Completion of these agreements will secure the future of Silverjet and its long term development. In the unlikely event that these agreements are not completed, Silverjet will have to source alternative means of funding as a matter of urgency.’
Silverjet chief executive Lawrence Hunt said: ‘This investment places Silverjet in a strong position to further develop our brand and proposition. It is particularly encouraging to have secured this agreement in a challenging environment for all airlines.’
The deal it depends on the approval of shareholders and the UK Civil Aviation Authority. We hope it is not a case of deja vu. Rival all business class airline Eos announced that it had raised $50 million ten days before it stopped flying and entered bankruptcy over the weekend. When the deal fell though, it had no option but to close down. We hope Silverjet have more luck.
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