Fastjet, the low-cost African airline, has announced its decision to delist from Alternative Investment Market (AIM), citing a weak financial position.
AIM’s success ultimately stems from its ability to enable companies to raise long term capital efficiently from an increasingly wide range of institutional investors, which helps support rapid growth.
“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,” the company said.
“The last day of dealings in the company’s ordinary shares will be tomorrow 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.”
As at 14 August 2020, the group had cash reserves of US$1.3 million with no restricted cash. Of the group’s 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.
On legal claim in respect to FedAir – Trieloff, an 18.85% shareholder, claims that the technical breach has terminated the share purchase agreement (SPA) and that all shareholders in FedAir prior to the Sale should be restituted.
Trieloff has made a further claim that remains unsubstantiated, for certain pre-emptive rights over all shares subject to any resale, 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,” the company said.
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 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,” Fastjet said.
“In the event that Trieloff exercises the offered preemptive rights over the Selling Shareholders’ shares, and further retains his own 18.85% shareholding, then a consideration of approximately US$2,585,000 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,” the company said.
Meanwhile, Fastjet has secured approval from the Reserve Bank of Zimbabwe (RBZ) to register certain historic group intercompany loans made to Fastjet Zimbabwe Limited with a value of US$22,524,738 as a legacy loan and a further US$2,716,376 of company creditors in Zimbabwe as blocked creditor funds.
“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,” it said.
RBZ has allowed the company to draw against the Legacy Loan in ZWL 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.”
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, Fastjet said, “It will cease to be a going concern.”
The company added that “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.”
The 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.
However in the interim the Company continues to perform limited repatriation flights between Zimbabwe and South Africa.