Fastjet, a low cost African airline, which revealed in September 2018 its need to acquire more cash within a month, announced a fundraising and equity refinancing aimed at increasing its equity base by at least $40 million.
The company, which needed more cash to continue operating, revealed that the funding would significantly reduce its debt and provide the company with working capital until the end of 2019.
The African airline’s shares lost more than half their value after September’s announcement. Soon afterwards, the airline which operates in Tanzania, Zambia, Zimbabwe, Mozambique and South Africa, announced it had raised $11.5 million through a placing of 898.4 million shares.
CEO of Fastjet, Nico Bezuidenhout said “business in our continuing operations in Zimbabwe and growth-markets of South Africa and Mozambique is on the right track”.
Fastjet’s largest shareholder Solenta Aviation also agreed to subscribe 316.7 million shares of Fastjet, raising $4.1 million and increasing Solenta’s stake in the company to 54.3 percent from 29.8 percent. Fastjet will issue 1.91 billion shares valued at $24.4 million to acquire four Embraer 145 aircraft from Solenta and to settle the majority of Solenta long-term loans to the company.
In addition to the placing and Solenta Aviation’s intervention, Fastjet also proposed an open offer to raise up to $5.3 million.
Fastjet, which was launched in 2012 and modelled on the likes of easyJet Plc and Ryanair Holdings Plc, has been running short of cash for more than two years.