Budget airline Fastjet said South African carrier Solenta would become a 28% shareholder in the company and that it had raised $28.8 million through a share placement.
Africa-focused Fastjet said on Thursday it would buy a special purpose vehicle (SPV) held within the Solenta group by issuing nearly 95.6 million shares.
The SPV has three wet-leased aircraft and the supply of other services over the next five years.
The share issue was priced at 16.3 pence each, representing a nearly 2% discount to Fastjet’s Wednesday close of 16.625 pence, the company said.
The company said it had placed 143.4 million shares, raising proceeds in line with its target.
Fastjet also added that its chief executive Nico Bezuidenhout had subscribed to 124 522 shares, taking a 0.04% stake in the company.
Fastjet said it would use the proceeds for working capital purposes, allowing it to implement new revenue generating measures and reach cash flow break-even by the fourth quarter of 2017.
The company said Solenta would have the right to nominate two members to its board.
Fastjet is looking to cut costs amid tough conditions in its home market, Tanzania. In March, it warned that it would no longer be cash flow-positive this year.
Shares in Fastjet were up 3.7% at 17 pence by 1222 GMT, clocking trading volumes that were 5.8 times its 30-day average.
In November, Fastjet’s chairman resigned bowing to the pressure from its second largest investor to sack him for failing to relocate the airline’s head office quickly and criticised him for a high cost base. Source: Money Web