UK's Tolmount to buy BA Italian franchise NJI

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British Airways’ (BA) Italian regional franchisee National Jet Italia (NJI) is to be bought by UK company Tolmount in a deal worth up to £35 million ($58 million).

It marks the start of a concerted attempt by Tolmount to step up its aviation activity. The company, listed on the London Alternative Investment Market (AIM), plans to change its name to Aviation Partners Worldwide and says it is seeking further opportunities in the sector.

The proposed deal comes a year after the Rome-based carrier commenced flights. Initially serving Palermo in Sicilly from the Italian capital, NJI now also operates flights to Catania, Athens, Milan and Nice. It represents the oneworld alliance’s only toehold in Italy.

Tolmount plans to acquire 99.99% of NJI for an initial sum of £30.7 million, with a further $4.2 million possibly due in 2003 depending on the airline’s performance in the 2002 financial year.

NJI is currently majority owned (80.4%) by Netherlands-based investment company Magitbay Holdings, while BAE Systems holds a further 19.65% - the company previously stated that it had taken no equity in NJI, but had provided some debt to the start-up. NJI director Marcantonio Lucido and BA hold the remaining shares. Under the envisaged deal the UK airline will continue to own one share in the Italian regional.

The company plans to complete the deal through the issuing of new Tolmount shares, after which BAE Systems will own between 11-13% of the share capital of the enlarged company. Tolmount also hopes to raise between £13-16.5 million for the enlarged company through the placing of new shares, helping fund both NJI’s route expansion and provide additional working capital for Tolmount. The deal would be scratched should Tolmount fail to raise the minimum placing of £13 million.

NJI, which currently operates four British Aerospace BAe 146-300s and two Boeing 737-400s, is eyeing new routes from Rome to Tel Aviv, Istanbul and Cairo, together with charter opportunities within southern Europe. NJI carried 350,000 passenger since its launch of services last July, and incurred a loss of £14.4 million for the nine months to September 2000 – generating net sales of £2.1 million during the third quarter.

Tolmount chairman Peter Sutch, formerly chairman and CEO of Cathay Pacific, says in a statement: “The first acquisition for Tolmount brings us an opportunity to exploit a gap in the third largest aviation market in Europe and the potential of Rome as a southern European hub.

“Our strategy will be to identify other similar opportunities in a rapidly changing aviation market. Our proposed change of name to Aviation Partners Worldwide reflects the direction we intend to drive our business.”

NJI founder, ex-CEO of National Jet Systems of Australia Warren Seymour, and fellow NJI management member, former Cathay Pacific financial manager Michael Scantlebury, will both join the Tolmount board.

Trading in Tolmount shares, which was suspended in April pending the possible acquisition announcement, resumed this morning.