TIDMFJET
RNS Number : 6375W
Fastjet PLC
20 August 2020
fastjet Plc
("fastjet", the "Company" or the "Group")
Trading Update
20 August 2020
fastjet, the low-cost African airline, today provides an update
to the market and shareholders.
Trading Update
The Company continues to perform limited repatriation flights
between Zimbabwe and South Africa. With the continued restriction
on international travel into South Africa, the Company has
maintained its suspension of scheduled flight operations with
routine commercial flights suspended until at least 30 September
2020. At all times, the safety and wellbeing of the Company's staff
and customers remain of paramount importance and focus. The Company
continues to assess the situation daily and will provide further
updates as and when necessary.
The President of South Africa announced on Saturday 15 August
2020 that the country would relax lockdown restrictions to Level 2
lockdown, effective from midnight Monday 17 August 2020. This means
that the entire domestic economy may reopen for business including
full domestic travel and resumption of all hotels, tourist resorts
and associated business. A curfew remains in place in South Africa
from 22:00 to 04:00 daily. The board of directors of the Company
(the "Board") believes that South Africa entering Level 2 lockdown,
which includes the removal of domestic air travel restrictions, is
a good indication that the next relaxation should be to Level 1,
which would then include international travel restrictions being
removed. However, the Board believes that international travel will
only resume from mid October 2020 at the earliest.
Legal claim in respect to FedAir
As announced on 24 July 2020, Carl Trieloff ("Trieloff"), an
18.85% shareholder of Federal Airlines Proprietary Limited
("FedAir") prior to its sale to Parrot Aviation Proprietary Limited
("Parrot") in October 2018 (the "Sale") and a selling shareholder
on the Sale, has issued a claim that the Sale was not completed due
to a technical breach of the share purchase agreement (the "SPA"),
whereby a condition linked to regulatory approvals which has now
been completed was not completed within the timeframe prescribed in
the SPA. Trieloff claims that the technical breach has terminated
the SPA and that all shareholders in FedAir prior to the Sale (the
"Selling Shareholders") should be restituted. Trieloff has made a
further claim, that remains unsubstantiated, for certain
pre-emptive rights over all shares subject to any resale (the "Sale
Shares"), if restituted and resold.
The Selling Shareholders, excluding Trieloff, of the remaining
81.15% in FedAir do not hold the same beliefs or claims as Trieloff
and had confirmed their intention to offer back their shares to
Parrot through a new share sale agreement with Parrot to resolve
the technical breach. Following legal advice, Parrot entered into a
new share sale and purchase agreement on 14 August 2020 with the
Selling Shareholders, excluding Trieloff, for 81.15% of the share
capital of FedAir (the "New SPA"). The financial terms were
identical to the original SPA with the only substantive difference
being the amendment to the condition that resulted in the technical
breach.
In addition, despite Trieloff's claims to certain pre-emptive
rights on all Sale Shares remaining unsubstantiated, as a condition
to completion of the sale of shares from the Selling Shareholders
to Parrot, agreed by both the Selling Shareholders and by Parrot,
pursuant to the New SPA, Trieloff has been granted a 30 business
day pre-emptive right to acquire the 81.15% from the other Selling
Shareholders. In the event that Trieloff exercises the offered
pre-emptive rights over the Selling Shareholders' shares, and
further retains his own 18.85% shareholding, then a consideration
of approximately US$2,585,000 (R44,400,000 at current ZAR exchange
rates) representing 100% of the original share sale proceeds, will
need to be paid to the Company by Trieloff. This will in effect
amount to a reversal of the original Sale of FedAir.
Should Trieloff not exercise the offered pre-emptive rights then
Parrot has agreed under the New SPA to repurchase the 81.15%
shareholding held by the Selling Shareholders, excluding Trieloff.
This would not involve the exchange of any consideration. Parrot
would then engage separately with Trieloff on his own intentions,
which could be to either enter a new sale agreement with him to
sell his shares to Parrot thereafter, or alternatively for Trieloff
to remain an 18.85% shareholder in FedAir, which would require the
return of the sale proceeds originally paid to him under the
SPA.
Solenta Investment Holdings (Pty) Ltd ("SIH"), a South African
registered company, is one of the Selling Shareholders, and as a
subsidiary of Solenta Aviation Holdings Limited ("SAHL"), it is
considered a "related party" to the Company by virtue of SAHL being
a "substantial shareholder" as defined in the AIM Rules for
Companies (the "AIM Rules").
Although no consideration has been paid or will be paid by the
Company, when aggregated with previous transactions entered into
with SAHL or its subsdiairies during the prior twelve month period
pursuant to AIM Rule 16, the entering into the New SPA by SIH (the
"Transaction") is classifed as both a related party transaction and
a substantial transaction pursuant to AIM Rules 13 and 12
respectively. The Transaction was identified as a related party
transaction by the Board prior to being entered into on Friday 14
August 2020, but Liberum as the Company's Nominated Adviser were
only consulted on Tuesday 18 August 2020.
Capital Requirements and Restructuring Proposal
The Company has secured approval from the Reserve Bank of
Zimbabwe ("RBZ") to register certain historic Group intercompany
loans made to Fastjet Zimbabwe Limited ("Fastjet Zimbabwe") with a
value of US$22,524,738 as a legacy loan (the "Legacy Loan") and a
further US$2,716,376 of Company creditors in Zimbabwe as blocked
creditor funds. The Legacy Loan balance forms part of the total
Group intercompany loan funding to Fastjet Zimbabwe since it first
started operations, but none of the loans had formally been
registered with the RBZ beforehand. These approvals with the RBZ
are recognitions from the RBZ that the loans were effected under
the prior 1:1 currency regime towards investment and continued
support of the Company's operations in Zimbabwe. The Company is
awaiting the final position from the RBZ on the next steps to
expunge balances under the Legacy Loan, as new legislation is being
drafted to govern this. In the meantime, the RBZ has allowed the
Company to draw against the Legacy Loan in ZWL currency (Zimbabwe
local currency) to settle fastjet Zimbabwe creditors of
US$3,577,173. There is no guarantee of continued access to the
Legacy Loan facility due to the foreign currency shortages that
remain in Zimbabwe and the future financial benefit for the Company
is difficult to quantify at this stage.
FedAir received a R12,639,647 (approximately US$760,000)
COVID-19 Emergency Term Loan facility from its bankers, Standard
Bank of South Africa Limited, and the loan agreements have been
agreed and implemented.
The headroom of cash resources available to the Company,
however, remains minimal and continues to be drawn down on to
settle fixed costs and obligations of the Company. With the
prolonged travel restrictions, which could continue into November
2020, the Company will require additional cash of at least
US$1,500,000 before November 2020. If flight operations do not
restart by the middle of October 2020, or the Company is unable to
access further hard currency from the RBZ against the Company's
Legacy Loan, or the Company does not complete a fresh capital raise
before the end of the year, it will cease to be a going
concern.
The Company has therefore approached SAHL, its main shareholder,
to underwrite a capital raise following the delisting and
registration of the Company as a private company which is expected
to be completed by the end of September 2020. SAHL has confirmed to
the Board it will be prepared to underwrite a capital raise of at
least US$1,500,000 if called on by the Board, but on terms that
still need to be negotiated and agreed.
The Board believes that, based on current financial projections,
funds available and expected to be made available through the
Legacy Loan facility or through a capital raise of at least
US$1,500,000, together with the current creditor terms agreed, the
Company will continue to have sufficient resources to meet its
operational needs until the end of December 2020 should flight
operations not restart by then.
Should flight operations restart by December 2020 and the
Company completes a capital raise of at least US$1,500,000 before
31 December 2020, and further funds are made available through the
Legacy Loan facility, then the Company expects to continue
operating as a going concern until at least December 2021, based on
current projections which would include passenger levels returning
to pre COVID-19 levels within three months of resuming scheduled
operations.
Following the passing of the resolutions at the Company's
General Meeting held on 12 August 2020 regarding, amongst other
things, the cancellation of admission of the Company's ordinary
shares to trading on AIM, the Company's Board has also agreed to
re-assess the proposed disposal of fastjet Zimbabwe to the investor
consortium led and underwritten by SAHL and other local investors
in Zimbabwe and whether this option remains attractive considering
the delays incurred and the impacts of COVID-19 on these
negotiations.
Cash Position
As at 14 August 2020, the Group had cash reserves of US$1.3
million with no restricted cash. Of the Group's US$1.3 million cash
reserves, FedAir has a balance of US$0.6 million which cannot be
transferred or lent in any manner to any other fastjet Group entity
due to the covenants and restrictions agreed when accepting the
COVID-19 loan facility. Of the FedAir US$0.6 million, an amount of
US$0.24 million is new funds drawn down by FedAir under their
approved COVID-19 loan. Of the remaining cash of US$0.7 million
held by the Group, US$0.07 million is in Zimbabwe and currently
unrestricted
Delisting
Following the passing of the resolutions at the Company's
General Meeting held on 12 August 2020 the Company is proceeding
with the cancellation of trading in its ordinary shares on AIM. T
he last day of dealings in the Company's ordinary shares will be
Friday 21 August 2020 and, at 7:00 a.m. on Monday 24 August 2020,
the admission to trading on AIM of the Company's ordinary shares
will be cancelled. Thereafter trading in the Company's ordinary
shares will be transferred to the Asset Match trading platform on
which shareholders will be able to trade their shares.
This announcement is released by fastjet plc and contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Kris Jaganah, Group Chief Financial
Officer.
fastjet plc Tel: +27 (0) 10 070 5151
Mark Hurst, Group Interim Chief
Executive Officer
Kris Jaganah, Group Chief Financial
Officer
Liberum Capital Limited Tel: +44 (0) 20 3100 2222
Nominated Adviser and Broker
Andrew Godber
Clayton Bush
James Greenwood
William Hall
Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571
Financial PR
Angharad Couch
Toby Moore
Nick Hayns
NOTES TO EDITORS
About fastjet
Fastjet is a multi-award-winning African value airline that
began flight operations in 2012. Its awards include Leading African
Low-Cost Carrier World Travel Awards 2016, 2017, 2018 and 2019, and
Skytrax World Airline Awards Best Low-Cost Airline in Africa
2017.
Today, fastjet connects the three major cities in Zimbabwe by
flying between Harare and Victoria Falls and Harare and Bulawayo.
Internationally the airline offers flights from Harare and Bulawayo
to Johannesburg in South Africa.
In October 2018, fastjet acquired an interest in FedAir, which
provides unscheduled shuttle and charter services to the game
lodges in the Southern Africa region.
Since commencing operations fastjet has flown over 3.5 million
passengers and has established itself as a punctual, reliable, and
affordable airline, with value-added services inclusive of free
baggage allowance(s), airport lounge access, dedicated check-in and
more according to the new fare attributes introduced across their
network.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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