FASTJET MAKES ANNOUNCEMENT ON THE URGENT NEED FOR ADDITIONAL FUNDING AS STORM CLOUDS GATHER OVER A MAJOR SHAREHOLDER
(Posted 27th June 2018)
On the 05th of June did Fastjet announce that it had entered into an unsecured loan agreement with third parties, Annunaki Investments (Private) Limited ("Annunaki") and SSCG Africa Holdings ("SSCG"), in order to make available a portion of the Group’s restricted cash held within Zimbabwe. Zimbabwe is one of the countries in Africa where airline funds are held in violation of international conventions which require member states to remit such funds promptly. In addition Fastjet announced at the time that it was entering into the quieter period of trading across the calendar year and on forecast projections, headroom over available cash resources was minimal, particularly in the early part of the next year.
The cash balance for the company as at 24th of May, in advance of entering into the above loan agreements, was given as $7.5m, $5.4m of which was restricted cash in Zimbabwe of which US$5m was utilised to fund the loan to Annunaki. Fastjet received a loan of US$2m from SSCG.
Since that date has the Company continued to spend cash and as of 18th of June had a cash balance of US$3.3m reflecting the recent purchase of equity in three ATR 72-600 aircraft, further operating cash outflows and a creditor reduction. US$1.75m of this remains restricted cash in Zimbabwe net of the loan swap agreements.
Fastjet is currently in close discussions with its major and other shareholders regarding a potential additional equity fundraising, in the absence of which the Group could be at risk of not being able to continue trading as a going concern.
Whilst discussions with certain shareholders have taken place are these discussions if not outright negotiations ongoing and there can be no guarantee of a successful outcome it is understood at this time.
It is expected that any equity fundraising effort will be concluded either way when the announcement of the Company’s annual results for the year ended 31st of December 2017 is made, which is expected soon.
However, should the fundraising attempt not be successful could it result in the annual results not being published and the Company being suspended from trading on AIM.
The company said that further announcements will be made in due course.
There have been growing suggestions that Solenta, the company’s top shareholder in percentage terms, could be holding out on further capital injection to have other shareholders lose patience with the company and perhaps in this way ‘encourage’ consent to sell their shares for a fraction of their hoped for value, in other words for the proverbial song.
Such a development, if confirmed and if it happens, could turn Fastjet into a fully owned Solenta Aviation brand.
Confirmation is being sought to get to the bottom of this while several shareholders of Fastjet are, metaphorically speaking, screaming bloody murder down this correspondent’s messaging platforms and email inboxes.
Share values, on these news coming across the horizon of pundits and observers and of ever more shareholders this morning, took an immediate dive but the true extent of that can only be established when the LSE opens in a few hours time.