Silverjet, the British exclusively business class airline, announces an update on its working capital position and that it has entered into a memorandum of understanding with a UAE based investor (the “Investor”). Following recent material increases in fuel prices and tightening of credit conditions in the airline industry, Silverjet’s working capital has deteriorated and its residual reserves are limited.
The MOU entered into April 29, 2008 provides that approximately $25.0 million (12.7 million pounds Sterling) will initially be invested directly in Silverjet by means of debt and equity. It is anticipated that the equity element will amount to approximately $8.0 million (4.1 million pounds) which will be subscribed at 17 pence per share; as a result the new ordinary shares will represent approximately 28 per cent of the enlarged share capital. It is expected that a debt facility will be made available to the Company imminently.
The MOU also sets out the intent by the Investor to invest up to a further $75 million (38.1 million pounds) in the ongoing development of Silverjet and to participate in the international rollout of the Silverjet brand and concept into new markets within the Middle East, the Far East and Africa.
The Directors anticipate that Silverjet will enter into binding agreements in respect of this initial tranche of the investment imminently. It is anticipated that these agreements will be conditional, inter alia, upon Board, and, in the case of the equity subscription, Civil Aviation Authority and shareholder approval pursuant, inter alia, to Rule 21 of The City Code on Takeovers and Mergers (the “Code”). 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.