Africa's first low-cost carrier, fastJet, has secured funding that will enable it to further working capital and plan for its expansion in Africa.
The £15.68m zero coupon convertible securities will be provided by Bergen Global Opportunity Fund, and will mitigate the effect of potential dilution to existing shareholders.
fastJet's Chief Executive Officer, Ed Winter, said: "This agreement with Bergen gives us access to very significant funding over the next year on a flexible basis and will provide us with a solid platform on which to grow the business and expand our operations in Africa.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"The investment structure potentially reduces the dilution to existing shareholders and gives us the opportunity to restructure parts of the business and adapt our business model in the light of our experience so far in Africa.
"Securing this funding will assist us in our core objective of making fastJet the first pan-African low-cost airline and meeting the growing demand for air travel across the continent."
The securities will be issued in six tranches, the first of which will have the nominal value of around £2.56m and a term of 18 months. The remaining five will have a value of £2.625m. The subsequent convertible securities will have a term ending 15 months after the date of issuance of the second convertible security.
The company will have the right to repurchase the securities for cash at their nominal value (and without a fee or penalty) within a certain redemption period, it said.
fastJet will also issue Bergen with 44m ordinary shares of £0.01 at par, which will be admitted for trading on or around March 13th.
Bergen may be required to make a further payment to fastJet once all of the obligations of the agreement have been finally met and no security remains outstanding, depending on the price of shares at the time.
fastJet's share price rose 7.48% to 2.88p in opening trade.
NR
-
8 of the best converted properties for sale nowThe best converted properties for sale – from an apartment in the former Hartley’s Jam factory on London’s Southbank, to a converted 18th-century mill in Itteringham, Norfolk
-
How taking a two-year career break could leave a £26k hole in your pensionCareer breaks are increasingly common but it is important to take steps to protect your pension, as gaps compound over time
