(Reuters) - Low-cost African airline Fastjet, which said in September it needed more cash within a month to continue operating, announced a fundraising and equity refinancing aimed at increasing its equity base by at least $40 million.
Fastjet, whose shares lost more than half their value after September’s announcement, said the steps would significantly reduce its debt and provide the company with working capital until the end of 2019.
The airline, which operates in Tanzania, Zambia, Zimbabwe, Mozambique and South Africa, announced soon afterwards that it had raised $11.5 million through a placing of 898.4 million shares.
“Business in our continuing operations in Zimbabwe and growth-markets of South Africa and Mozambique is on the right track”, CEO Nico Bezuidenhout said.
In addition to the placing, Fastjet’s largest shareholder Solenta Aviation agreed to subscribe 316.7 mln shares of Fastjet, raising $4.1 million and increasing Solenta’s stake in the company to 54.3 percent from 29.8 percent.
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Fastjet will also 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, Fastjet also proposed an open offer to raise up to $5.3 million.
Fastjet, launched in 2012 and modelled on the likes of no-frills airlines easyJet Plc and Ryanair Holdings Plc, has been running short of cash for more than two years.
Easyjet founder Stelios Haji-Ioannou also helped found Fastjet.