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Fastjet – 5 months after the last, it’s bailout fundraising AGAIN!

By Steve Moore | Friday 6 January 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

“fastjet (FJET), the low-cost African airline, is pleased to announce that… it has successfully placed 143,449,794 new ordinary shares at a price of 16.3 pence per share… If the placing does not proceed and complete, and in the absence of the group being able to successfully agree or implement any alternative funding, the directors would seek to commence a process of placing the group into administration. Wait a minute, just in August the company raised “total aggregate gross proceeds of £15.2 million… all at 50 pence per new ordinary share”. What’s gone on?

The answer is, as Tom Winnifrith noted HERE, it’s all gone horribly wrong AGAIN! The announcement notes disappointing operational performance and that delivery of a ‘stabilisation plan’ “has involved certain unexpected delays and more onerous costs than had originally been anticipated”.

The company is now to try again – this time via a conditional agreement with Solenta Aviation, an aircraft operator and services group based in Johannesburg, “for the provision and operation of three wet-leased aircraft and the supply of other services over the next five years”. As $19.2 million of payment for this, Solenta is to be issued 95,633,199 new shares in fastjet (over 28% of the enlarged share capital), with the balance of payments to be paid monthly in cash. It is added;

“In conjunction with the Solenta agreement, the company is conducting the proposed placing to provide fastjet with what the board believes are the funds necessary to complete the stabilisation plan and reach cash flow break even by Q4 2017… As well as helping us to achieve this objective, the fundraising and Solenta agreement will also provide the platform from which to flexibly and cost-effectively pursue fastjet's medium to long-term objective of becoming the first truly pan-African low-cost airline.”

Hmmm. Will they though? Similar has been heard all before here – and as such it will take much more to convince. Based on the track-record, this remains a sell.

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