UK long-haul all-business carrier Silverjet has provisionally secured $25 million in funding from an unnamed UAE investor, boosting its dwindling cash reserves.
London Luton-based Silverjet, which last month notified the stock market of potential acquisition talks, says it signed a memorandum of understanding (MOU) with the new investor on 29 April.
Under the debt and equity deal - which must be approved by Silverjet’s board, shareholders and the UK CAA - the unnamed investor will inject $8 million into the airline in exchange for a 28% stake. It will pay £0.17 ($0.33) per share and will immediately provide the airline with a debt facility.
Silverjet says it expects to enter binding agreements immediately, adding: “Following recent material increases in fuel prices and tightening of credit conditions in the airline industry, Silverjet’s working capital has deteriorated and its residual reserves are limited.
“Completion of these agreements will secure the future of Silverjet and its long-term development. In the unlikely event that these agreements are not completed, Silverjet will have to source alternative means of funding as a matter of urgency.”
It describes the $25 million working capital boost as an “initial investment” and adds that the new shareholder will later inject up to a further $75 million into the business. This funding will be used to support Silverjet’s development, including its brand and concept roll-out into the Middle and Far East, and Africa.
Once the investment is completed, the new shareholder will take two seats on Silverjet’s board. Despite the development, Silverjet says it remains in an offer period and adds that a further announcement will be made as soon as practicable.
Silverjet CEO Lawrence Hunt says: “We are delighted to have entered into this memorandum of understanding with a long-term strategic investor.
“This investment places Silverjet in a strong position to further develop our brand and proposition. It is particularly encouraging to have secured this agreement in a challenging environment for all airlines.”
Details of the cash boost come during a tough period for all-premium transatlantic carriers. US carrier Eos halted flights on 28 April, joining fellow transatlantic player Maxjet which ceased operations last December.
Source: flightglobal.com's sister premium news site Air Transport Intelligence news