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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Fastjet Plc | LSE:FJET | London | Ordinary Share | GB00BWGCH354 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.03 | 0.025 | 0.035 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMFJET
RNS Number : 6839H
Fastjet PLC
16 November 2018
THIS ANNOUNCEMENT, INCLUDING THE APPIX, AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, OR REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
fastjet Plc
("fastjet", the "Company" and, together with its Subsidiaries, the "Group")
16 November 2018
Proposed placing and subscription to raise gross proceeds of not less than US$15.6 million
Proposed open offer to raise up to US$5.3 million
Issue of equity for balance sheet restructuring of US$24.4 million
Transactions increase equity base by at least US$40.0 million
fastjet, the low-cost African airline, is pleased to announce a proposed fundraising and equity refinancing to issue equity with a value at the issue price of not less than US$40.0 million (the "Equity Refinancing") comprising:
i. a placing by way of an Accelerated Bookbuild to raise gross proceeds of not less than US$11.5 million before expenses (the "Placing") through the issue of at least 898,437,499 new ordinary shares ("Placing Shares") at a placing price of one penny per new ordinary share (the "Issue Price");
ii. a subscription by Solenta Aviation Holdings Limited ("Solenta"), who has agreed to subscribe for 316,738,282 shares at the Issue Price for gross proceeds of US$4.1 million; and
iii. the issue of 1,909,824,218 shares at the Issue Price with a value of US$24.4 million a) to acquire four Embraer 145 aircraft (the "Embraer 145s") from Solenta and to settle associated early termination lease charges, b) settlement of the majority of the Solenta long term loan and overdue interest, and c) professional fees.
In addition and subject to the passing of certain resolutions at the General Meeting, the Company is proposing to raise up to a maximum of GBP4.1 million (approximately US$5.3 million) by way of an open offer to be made to Qualifying Shareholders (the "Open Offer") at the Issue Price.
The Issue Price represents a discount of 39 per cent. to the closing price of 1.65 pence per ordinary share on 16 November 2018.
The Placing which is being conducted by way of an accelerated bookbuild (the "Accelerated Bookbuild") will be launched immediately following this Announcement, in accordance with the terms and conditions set out in the Appendix to this Announcement.
The Placing Shares are not being made available to the public. It is envisaged that the Accelerated Bookbuild will be closed no later than 6.30 p.m. today, 16 November 2018. Details of the number of Placing Shares and the approximate gross proceeds of the Placing will be announced as soon as practicable after the closing of the Accelerated Bookbuild. Neither the Placing nor the Open Offer are underwritten.
The Company intends to send a circular to shareholders ("Circular") in connection with the Equity Refinancing and the Open Offer on or around 21 November 2018.
The Equity Refinancing and the Open Offer is conditional upon, inter alia:
(i) the approval by Shareholders of the Authorising Resolution which will be sought at the General Meeting which is expected to be held at 10.00 a.m. on 7 December 2018;
(ii) the Solenta Subscription Letter becoming unconditional in all respects (as further described at Section 3 of this Announcement); and
(iii) the Placing Agreement not having been terminated in accordance with its terms prior to Admission.
If either (i) Shareholders' approval of the Authorising Resolution is not passed, or (ii) the Solenta Subscription Letter does not become unconditional in all respects prior to Admission, or (iii) the Placing Agreement does not become unconditional in all respects prior to Admission, the Equity Refinancing and the Open Offer will not proceed and the Group will be at risk of not being able to continue trading as a going concern. If the Equity Refinancing does not proceed and complete, and, in the absence of the Group being able to successfully agree or implement any alternative funding, the Directors will seek to commence the process of placing the Group into administration. Under such circumstances, Shareholders could lose all or a substantial amount of the value of their investment in the Group. Accordingly, the Directors believe that the successful completion of the Equity Refinancing and the Open Offer represents the best option available to the Group.
Highlights:
-- The Equity Refinancing will reduce fastjet's debt significantly (c.US$2m of short term loans and c.US$2m of long-term debt outstanding) and it is expected that it will result in the Group being fully funded through 2019.
-- The Company, with a substantially stronger balance sheet and recently improved results from operations, will be better positioned for growth going forward.
-- The Equity Refinancing should leave the Company with improved underlying core performance expectations and will be used to:
o bring current creditors up-to-date;
o significantly reduce long term debt and associated servicing costs;
o settle the liabilities of the Continuing Group (being the Group excluding its interest in fastjet Tanzania arising from its decision to stop all funding to fastjet Tanzania and the Tanzania MBO); and
o provide fastjet with sufficient working capital until the end of 2019.
-- The proceeds of the Equity Refinancing will comprise:
o US$12.0 million of equity issued to Solenta for the acquisition of four Embraer 145s (and to settle associated early termination lease charges) to be deployed in Zimbabwe, as fastjet intends to localise assets;
o US$10.4 million of equity issued to convert a significant portion of long term debt owed to Solenta (and accrued interest) (total principal debt owed to Solenta of US$12.0 million);
o US$6.6 million of cash to settle all current short-term hard currency creditors;
o up to US$3.7 million of cash to cover major creditor settlements associated with the decision to stop funding fastjet Tanzania;
o US$2.8 million of cash to fund Mozambique losses, as operations remain in early stage development;
o US$2.5 million of cash to settle hard currency creditors in Zimbabwe, providing contingency for currency repatriation;
o US$2.0 million of equity to settle professional fees associated with the Equity Refinancing; and
o up to US$5.3 million of cash for general working capital purposes across the Group depending on uptake of the Open Offer.
-- As a consequence of the Solenta Investment, Solenta's interest in Ordinary Shares will increase from 29.8 per cent. to 54.3 per cent.. Under Note 5(c) of the Notes on Dispensations from Rule 9 of the Code, the Panel Executive has waived the requirement for a general offer to be made by Solenta under Rule 9.1 of the Code on the basis that independent Shareholders holding Ordinary Shares carrying more than 50 per cent. of the voting rights of the Company which would be capable of being cast on a "Whitewash" resolution have confirmed in writing that they approve such a waiver and would vote in favour of any resolution to that effect at a General Meeting.
-- Trading for the four months ending October 2018, with the exception of fastjet Tanzania is broadly in line with management expectations:
o continuing operations of Zimbabwe and Mozambique (launched November 2017) performance improvement is ongoing, with revenue from these two markets growing to $12.5 million and generating a trading loss of $1.3 million;
o in South Africa, FedAir generated revenue of US$3.7 million, delivered trading profits of $0.35 million (for the three months ending September 2018) while providing a base from which the fastjet brand can gradually enter the market during 2019;
o in Tanzania, which represents a discontinued business going forward, delivered $9.6 million in revenue and a trading loss of $4.7 million, consequent to Air Tanzania, the State-owned carrier in Tanzania, deploying wide-body (Boeing 787) capacity on Domestic Tanzanian routes at below cost yields, as well as regulatory delays experienced in deploying further aircraft in this market.
-- The Company has entered into a conditional share sale agreement with local management in Tanzania in relation to the sale of the Company's interest in the holding company of fastjet Tanzania, fastjet Air TZ (BVI). Further details of the Tanzania MBO are set out at Section 2 of this Announcement.
Nico Bezuidenhout, CEO, commented:
"Business in our continuing operations in Zimbabwe and growth-markets of South Africa and Mozambique is on the right track and revenues from these markets now cumulatively exceed that generated in Tanzania, a market in which fastjet has been active since 2012. The steps taken in acquiring the fastjet brand in 2017 allows fastjet to change the deployment model in Tanzania away from one where we assume equity risk and funding obligation, in its stead aiming to deploy the brand in Tanzania on a franchise basis. The third successive award as Africa's leading low cost carrier, received at the 2018 World Travel Awards, supports fastjet's brand building journey whilst the benefit of a restructured balance sheet going forward, should support sustainable growth"
This Announcement is released by fastjet Plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this Announcement is made by Michael Muller, Chief Financial Officer of fastjet Plc.
For more information, contact:
fastjet Plc Tel: +27 (0) 10 070 5151 Nico Bezuidenhout, Chief Executive Officer Michael Muller, Chief Financial Officer UK media - Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571 Angharad Couch Eleni Menikou Toby Moore Nick Hayns For investor enquiries please contact: Liberum Capital Limited - Financial Tel: +44 (0) 20 3100 2222 Adviser, Nominated Adviser and Broker Clayton Bush Andrew Godber James Greenwood Trystan Cullen
NOTES TO EDITORS
About fastjet Plc
fastjet is a multi-award winning (including Skytrax World Airline Awards Best Low-Cost Airline in Africa 2017 and Leading African Low-Cost Carrier, World Travel Awards 2016, 2017 and 2018) African value airline for everyone that began flight operations in Tanzania in November 2012, flying passengers from Dar es Salaam to just two domestic destinations - Kilimanjaro and Mwanza.
Today, fastjet's route network includes Tanzanian domestic routes from its Dar es Salaam base to Kilimanjaro, Mbeya, and Mwanza, and international routes from Tanzania to Lusaka in Zambia and Harare in Zimbabwe. fastjet began branded domestic flights in Mozambique (Operated by Solenta Aviation Mozambique) in November 2017, its network presently between Maputo and Beira, Quelimane and Tete and celebrated its third year of operations in Zimbabwe in 2018. The carrier operates between Harare and Bulawayo, Harare and Victoria Falls and from Harare and Victoria Falls to Johannesburg in South Africa. The airline has flown over 3.5 million passengers with an impressive on-time performance aggregate, establishing itself as a punctual, reliable, and affordable carrier.
IMPORTANT INFORMATION
This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. The Company cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", or other words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in the price of commodities or changes in interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future explorations, acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals, and expectations set forth in the Company's forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Except as required by the Financial Conduct Authority (the "FCA"), the London Stock Exchange or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
This Announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Liberum Capital Limited or by any of its affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
Liberum Capital Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no-one else in connection with the Equity Refinancing and Open Offer, and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for providing advice to any other person in relation to the Equity Refinancing and Open Offer or any other matter referred to herein.
The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or Liberum Capital Limited that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and Liberum Capital Limited to inform themselves about, and to observe such restrictions.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Appendix or this Announcement should seek appropriate advice before taking any action.
The Placing Shares to which this Announcement relates may be illiquid and / or subject to restrictions on their resale. Prospective purchasers of the Placing Shares should conduct their own due diligence on the Placing Shares. If you do not understand the contents of this Announcement you should consult an authorised financial adviser.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.
The GBP/USD exchange used in respect of the Equity Refinancing and Open Offer is GBP1:US$1.28, being the closing exchange rate on 15 November 2018.
1. Introduction
The Company today announces a Placing by way of an accelerated bookbuild to raise gross proceeds of not less than US$11.5 million by way of placing with institutional and other investors of 898,437,499 Placing Shares at one penny per share. In addition to the Placing, the Company also announces the following Equity Refinancing arrangements:
-- a GBP3.1 million (approximately US$4.1 million) cash subscription by Solenta for 316,738,282 Solenta Investment Shares at one penny per share;
-- a debt for equity swap pursuant to which US$10.0 million of the principal and all of the outstanding interest (rounded down to US$446,750) up to 28 November 2018 owing by the Company to Solenta under the Existing Loan Agreement will be capitalised and subscribed in payment for 816,152,343 Solenta Investment Shares;
-- a subscription for US$12 million involving the acquisition by the Group of four Embraer 145s from Solenta (and to settle associated early termination lease charges) in payment for 937,421,875 Solenta Investment Shares; and
-- settlement of professional fees of US$2.0 million owing by the Company to Liberum through the issue by the Company to Liberum of 156,250,000 Liberum Shares (the "Professional Fees Payment").
In addition to the Equity Refinancing, the Company announces that up to a maximum of GBP4.1 million (approximately US$5.3 million) will be raised by way of an Open Offer made to Qualifying Shareholders of up to 411,440,871 Open Offer Shares. The Open Offer is being conducted on the basis of 57 Open Offer Shares for every 10 Existing Ordinary Shares held at the Record Date of 20 November 2018. No arrangement will be put in place to allow Qualifying Shareholders to apply for Open Offer Shares in excess of their Open Offer Entitlements.
The Equity Refinancing and the Open Offer (assuming take-up in full) will give total gross cash proceeds of GBP16.3 million (approximately US$20.9 million).
Further details of the Solenta Investment are set out in Section 3 of this Announcement.
As the allotment and issue of the New Shares will not be within the Company's existing authorities to allot shares for cash on a non-pre-emptive basis, a General Meeting is being convened to seek Shareholders' approval to grant new authorities to enable the Directors to issue such shares. In addition, the Aircraft Acquisition by the Group from Solenta (being a company connected with Mark Hurst, a director of the Company) will require Shareholders' approval under the substantial property transaction rules set out in the 2006 Act.
The Equity Refinancing and the Open Offer is conditional upon, inter alia:
(i) the approval by Shareholders of the Authorising Resolution which will be sought at the General Meeting which is expected to be held at 10.00 a.m. on 7 December 2018;
(ii) the Solenta Subscription Letter becoming unconditional in all respects as further described at Section 5 of this Announcement; and
(iii) the Placing Agreement not having been terminated in accordance with its terms prior to Admission.
If either (i) Shareholders' approval of the Authorising Resolution is not passed, (ii) the Solenta Subscription Letter does not become unconditional in all respects prior to Admission, or (iii) the Placing Agreement does not become unconditional in all respects prior to Admission, the Equity Refinancing and the Open Offer will not proceed and the Group will be at risk of not being able to continue trading as a going concern. If the Equity Refinancing does not proceed and complete, and, in the absence of the Group being able to successfully agree or implement any alternative funding, the Directors would seek to commence a process of placing the Group into administration. Under such circumstances, Shareholders could lose all or a substantial amount of the value of their investment in the Group. Accordingly, the Directors believe that the successful completion of the Equity Refinancing and the Open Offer represents the best option available to the Group.
2. Background to, and reasons for the Equity Refinancing
During 2018, fastjet has consolidated its existing network and maximised possible returns following the positive medium to long term impact of the Stabilisation Plan completed last year:
-- the airline has focused on increasing revenue and growing yield per passenger while simultaneously improving overall customer experience adapting to local market nuances and cultures;
-- marketing and communication efforts were amplified as the refreshed brand led to improved revenue opportunities and sales efforts focused on relationship building and revenue extraction from key channels;
-- Zimbabwe is delivering a strong financial performance, with greater levels of expense localisation helping to offset hard-currency repatriation restrictions. Capacity has increased 28 per cent. year-on-year and passenger numbers are up 70 per cent., while average fares increased 32 per cent. and the load factor rose from 60 per cent. to 80 per cent.;
-- Mozambique is showing good growth as it approaches its first year of trading. 68,000 passengers have been carried since the start of operations in November 2017, the average load factor is 64 per cent. for the three months to September 2018 and average fares showed an increase of 48 per cent. in the same period compared to the first quarter of 2018; and
-- in South Africa, Federal Airlines Proprietary Limited ("FedAir") is generating profits and cash, while providing a base from which the fastjet brand can gradually enter the market during 2019.
Despite progress in Zimbabwe and Mozambique, the Company continued to face several challenges during H1 2018 and the early part of H2 2018, including regulatory delays in Tanzania and a sub economical yield environment (whereby the Company's competitors have been selling tickets below cost price). As a consequence, the Company was unable to deploy its newly-acquired ATRs as planned.
Other factors impacting fastjet's performance include interest payments on legacy debt and the start-up losses in Mozambique (H1 2018 - loss of US$2.7 million). Operating costs such as fuel and maintenance were negatively impacted by currency fluctuation and a rising global fuel price; both the South African Rand and the Tanzanian Shilling lost value against the US Dollar.
fastjet Tanzania
As the Company announced on 26 September 2018, following the Board's evaluation of fastjet Tanzania's operations and the consequential financial impact of continued losses on the Group as a whole, the Board resolved to stop all funding to fastjet Tanzania with immediate effect.
A knock-on consequence of the above decision was that the Group's three leased ATRs could no longer be deployed in Tanzania as initially planned and, therefore, were no longer needed. Accordingly, the Directors have agreed early termination settlement arrangements on the three aircraft as part of the Equity Refinancing. These settlement arrangements, which include a return condition waiver, release the Group from a nine year remaining lease term subject to payment of current arrears and a three month lease penalty.
The Company has entered into a conditional share sale agreement with local management in Tanzania, regarding the sale of the Company's interest in the holding company of fastjet Tanzania, fastjet Air TZ (BVI). The Tanzania MBO is subject to certain conditions precedent, including execution of a brand licence agreement, a deed of adherence to fastjet Tanzania's shareholder's' agreement, and an off-set agreement. The sale consideration is US$1 and, subject to the approval of certain specified members of the Group, all debt owing to the Continuing Group will be forgiven on the condition that, inter alia, (i) a letter is received on or before 21 November 2018 from the Tanzanian Airport Authority and Tanzania Civil Aviation Authority confirming that they have no lien over the two Embraer 190 aircraft (the "Embraer 190s") sub-let to fastjet Tanzania and (ii) the deregistration of both Embraer 190s is achieved by 30 November 2018.
fastjet Mozambique
fastjet Mozambique is benefiting from strong market conditions and is expected to deliver up to c.US$23.0 million of revenue in 2019. Subsequently, the Company is considering launching additional routes in Mozambique. In addition, the expansion of the oil and gas industry will yield additional inflows for the fastjet Mozambique entity. As an outcome of the effective implementation of the new routes, effective yield management and marketing, good government relationships and a strategic partnership with the national flag carrier, the Group expects to become cash positive in Mozambique in 2020.
fastjet Zimbabwe
fastjet Zimbabwe has recently returned to profitability and is expected to deliver c.$33.0 million of revenue in 2019. However, the key challenge remains accessing these domestic funds outside of Zimbabwe, to settle hard currency suppliers. In order to mitigate this, fastjet Zimbabwe intends to localise aircraft leasing costs by acquiring four Embraer 145s for US$12.0 million to be satisfied by the issue of new Ordinary Shares to Solenta, which would result in c.US$220,000 per month hard currency outflow savings. This initiative also should also support output growth in Mozambique and Zimbabwe, which in turn provides supplementary hard-currency income for Zimbabwe.
By owning the existing leased assets (as opposed to fixed monthly lease cash outflows), along with utilising the Solenta infrastructure in Mozambique (e.g. no fixed cost), fastjet has flexibility to scale operations down materially in the event of aggressive new competitor market-entry. Similarly, the four Embraer 145s represent an effective increase in available aircraft capacity (previously three Embraer 145s used in active service and one as backup), which will support the additional route rights received by fastjet Zimbabwe allowing it to operate double-daily frequencies between Harare and Bulawayo (previous authority was limited to one daily flight), and support measured growth in Mozambique through frequency increases on existing and/or new routes, as and when required.
FedAir
In South Africa, FedAir generated revenue of US$3.7 million, delivered trading profits of US$0.35 million (for the three months ending September 2018) while providing a base from which the fastjet brand can gradually enter the market during 2019. South Africa is strategically important to fastjet given the relative size of the South African aviation market (c.13 million domestic passengers per annum), as well as the existence of strong trade and tourism flows with the existing fastjet markets. fastjet's management relationships and track record in South Africa, in addition to the FedAir platform, support an expedient launch at the appropriate time.
Trading updates
The Company announced on 26 September 2018 that it was encouraged by trading in the Zimbabwean and Mozambique markets, but the headroom of freely usable and available cash resources was minimal and the Company's ability to continue as a going concern remained very sensitive to its future funding requirement. The Company noted that additional funding would be required by the end of October to enable fastjet to continue operating.
The Company provided an update on 31 October 2018 notifying the market that it continued to review its current cash requirements and was able to continue operating beyond the end of October due to some improvement in trading and cash generation.
The Company provided a further update on 9 November 2018, announcing that it would be able to continue trading during November due to some improvement in trading, cash generation and internal efficiencies. The headroom available allowed the Company further time to continue discussions with its major shareholders and creditors.
As at 15 November 2018, the Group had cash balances of US$3.4 million, of which US$2.7 million is restricted cash held inside Zimbabwe.
The Board considers that the Company will be able to continue trading until the General Meeting.
3. Details of the Solenta Investment
The Company has today entered into the Heads of Agreement and the Solenta Subscription Letter with Solenta pursuant to which the Company and Solenta have agreed the terms and conditions on which Solenta will invest a total of US$26.5 million in the Company by subscribing for the Solenta Investment Shares at the Issue Price. None of the Solenta Investment Shares are subject to a lock-in arrangement. The Solenta Investment is comprised of the following elements:
-- a GBP3.2 million (approximately US$4.1 million) cash subscription by Solenta for 316,738,282 Solenta Investment Shares at the Issue Price;
-- a debt for equity swap pursuant to which US$10 million of the principal and all of the outstanding interest to 28 November 2018 (rounded down to US$446,750 to 28 November 2018) owed by the Company to Solenta pursuant to a shareholder loan agreement dated 4 April 2018 (the "Existing Loan Agreement") will be capitalised and subscribed in payment for 816,152,343 Solenta Investment Shares; and
-- a subscription for US$12.0 million involving the acquisition by the Group of the four Embraer 145s from Solenta (and associated early termination lease charges) in payment for 937,421,875 Solenta Investment Shares (the "Aircraft Acquisition"). Further details of the Aircraft Acquisition are set out at Section 8 of this Announcement.
The Solenta Investment remains conditional on:
a) the shareholders of the Company passing the Authorising Resolution;
b) the Existing Loan Agreement and the related security being amended as set out in the Heads of Agreement and as summarised below; and
c) the Company entering into a binding settlement agreement with GECAS (or such other of its subsidiary companies who is the lessor) as set out in the Heads of Agreement and as summarised below (the "GECAS Settlement Agreement" and the "GECAS Condition").
Summary of amendments to the Existing Loan Agreement and the related security under the Heads of Agreement
Pursuant to the Solenta Subscription Letter, the Existing Loan Agreement is required to be amended so as to reduce the principal amount from US$12 million to US$2.0 million with a lower interest rate of 6 per cent. (currently at 8 per cent., and becoming 10 per cent. in year two of the term) (the "Continuing Loan"). The Continuing Loan in a principal amount of US$2.0 million shall remain outstanding and shall be repayable only on or after 48 months from the date of the Admission and provided that, on a consolidated basis, the Company and its subsidiary undertakings have been trading profitably (i.e. profit before tax) for at least a six-month consecutive period (the "Profitability Condition") immediately preceding the expiry of such 48 month period and otherwise only on such later date when the Profitability Condition has been met. Where the Profitability Condition has been met at any time on or after the expiry of 36 months following the date of Admission, Solenta shall not unreasonably withhold its consent to a prepayment in full of the Continuing Loan together with all accrued and unpaid interest.
Pursuant to the terms of the Continuing Loan, the following existing security under the Existing Loan Agreement shall remain in effect, being: (i) a share charge over the Company's interest in FedAir (held via Parrot); (ii) a charge over the Company's interest in the "fastjet" brand; and (iii) a share charge over the Company's existing 49 per cent. holding in fastjet Zimbabwe.
In substitution for the existing security required over the three ATRs, the Company shall grant Solenta a first ranking share pledge over the Company's 100 per cent. holding in Fastjet Africa (such security to exclude fastjet Mozambique).
The Heads of Agreement further provide that:
(i) as part of these arrangements in respect of fastjet Zimbabwe, the Company shall procure that the existing fastjet Zimbabwe shareholders' agreement is amended to include the following:
-- the Company shall exercise its existing option to acquire the 51 per cent. local Zimbabwean holding in fastjet Zimbabwe and transfer such shares to a Zimbabwean company nominated by the Company having consulted with Solenta. Such shareholding shall be held by such nominee company subject to the call option arrangement in favour of the Company that is currently in place in respect of the 51 per cent. local Zimbabwe holding in fastjet Zimbabwe (the "Call Option");
-- Solenta shall have a right to nominate such number of individuals as is required to represent on the majority of the board of directors of Fastjet Zimbabwe in the event of the occurrence of either (a) an event of default under the Existing Loan Agreement (as amended) which is continuing and provided that there is also a material prejudice or jeopardy to the financial position, business or assets of Fastjet Zimbabwe (or otherwise a substantial and present risk of the occurrence of the same) and/or (b) the Company is put into administration, liquidation or subjected to any other similar proceedings (each such event hereinafter referred to as a "Trigger Event");
-- suspension of the rights of the Company to exercise the Call Option while the balance of the Continuing Loan is outstanding. Furthermore, in the circumstances of the occurrence of a Trigger Event, the Call Option shall be deemed to have been automatically and unconditionally terminated and / or the benefit of the Call Option deemed to have been immediately and unconditionally assigned to Solenta;
-- a suspension of the rights of the Company or any of its group companies to seek any repayment of its loans or to exercise the right to convert the same into equity (which may have effect of diluting the 51 per cent. local Zimbabwean shareholding of the nominee company in fastjet Zimbabwe), until after the Continuing Loan is repaid in full, except with the written prior consent of the Investor. Such suspension shall continue to be in force so long as the balance of the Continuing Loan is outstanding and in the circumstances of the occurrence of a Trigger Event the outstanding loan of the Company and/or its relevant group company(ies) shall be deemed to have been immediately and unconditionally ceded in full to the Investor; and
(ii) in relation to all Group companies subject to the amended security (fastjet Zimbabwe, FedAir, Parrot and fastjet Africa), the suspension of the rights of the Company or any of its Group companies to seek any conversion into equity or repayment of any intercompany loans and payables outstanding to the Company and/or its Group companies, payable and outstanding from the companies which form part of the amended security. Such suspensions shall continue until the Continuing Loan is repaid in full and in the circumstances of the occurrence of either (a) an event of default under the Existing Loan Agreement (as amended) which is continuing and provided that there is also a material prejudice or jeopardy to the financial position, business or assets of the Company or any of its group companies (or otherwise a substantial and present risk of the occurrence of the same) and/or (b) the Company is put into administration, liquidation or subjected to any other similar proceedings, the outstanding loan of the Company and/or the relevant group company(ies) shall be deemed to have been immediately and unconditionally ceded in full to Solenta.
Summary of the GECAS Condition
Completion of the Solenta Subscription Letter is conditional on the execution of the GECAS Settlement Agreement pursuant to which GECAS shall amend the existing leases of the two Embraer 190s leased to fastjet Africa. Such terms shall be approved by Solenta, such approval not being unreasonably withheld or delayed in circumstances where the agreement provides for full and final settlement of all claims for a settlement amount which does not, in effect. exceed the amounts provided by the Company for GECAS in its provisions to cover major creditor settlements associated with the decision to stop funding fastjet Tanzania and short-term hard currency creditors.
Use of Solenta cash subscription
The proceeds of the cash subscription from the Solenta Investment are to be solely used by the Company to fund Fastjet Zimbabwe's foreign hard currency obligations and to pay the ALM Settlement Amount.
Other settlement agreements
In accordance with the Heads of Agreement, the Company has executed settlement agreements with certain creditors relating to operations in Tanzania as a consequence of the Company's decision to cease funding fastjet Tanzania (as announced on 26 September 2018). Under the terms of one of the settlement agreements, the Company may be required to convert a debt of US$1.7 million owed to a creditor into new Ordinary Shares in the event that the Group on a consolidated basis has not been profitable (calculated in accordance with IFRS) for the six month period ending 30 June 2019.
In connection with the Aircraft Acquisition, the Company has also entered into a settlement agreement with Solenta and one of the Company's subsidiaries, Aircraft and Facilities Limited ("AFL"), pursuant to which the facility agreement entered into between AFL and Solenta on 23 January 2017 (the "Facility Agreement") shall be terminated (the "AFL Settlement Agreement"). Completion of the AFL Settlement Agreement and termination of the Facility Agreement is conditional on: (i) the Group (including AFL) paying all amounts due under the Facility Agreement to Solenta; (ii) the payment by fastjet to Solenta of a three month lease termination fee of US$495,000 in relation to three Embraer 145s leased to the Company pursuant to the terms of the Facility Agreement (such early termination fee is to be released in part satisfaction of Solenta's participation in the Solenta Investment); and (iii) the entry by the parties to the Facility Agreement into a new agreement by 31 December 2018 pursuant to which Solenta shall provide similar services and discounts to the Group as currently provided under the Facility Agreement. Following completion of the AFL Settlement Agreement, the Company shall release to Solenta those of its Ordinary Shares that have been held in escrow pending service delivery under the Facility Agreement.
4. Details of the Placing
The Company has entered into a placing agreement (the "Placing Agreement") with Liberum on customary terms and conditions pursuant to which Liberum has conditionally agreed, as agent for the Company, to use its reasonable endeavours to procure Placees for the Placing Shares at the Issue Price. The Placing is being conducted by way of an Accelerated Bookbuild led by Liberum as sole bookrunner. The Company has agreed to settle fees of US$2.0 million owing by the Company to Liberum of the Liberum Shares at the Issue Price.
The Issue Price of one penny per Placing Share represents a 39 per cent. discount to the closing middle market price of 1.65 pence per Ordinary Share on 16 November 2018.
The Placing and the issue of the Placing Shares are conditional, inter alia, upon the passing of the Authorising Resolution at the General Meeting; the Solenta Subscription Letter becoming unconditional in all respects save for Admission; none of the warranties in the Placing Agreement being untrue, inaccurate or misleading; the Placing Agreement not having been terminated in accordance with its terms; and Admission being effective by no later than 8.00 a.m. on 10 December 2018 (or such later date as the Company and Liberum may agree (being not later than 8.00 a.m. on 24 December 2018).
The books for the Accelerated Bookbuild will open immediately following this Announcement. The books are expected to close no later than 6.30 p.m. (London) today. The timing of the closing of the books and the making of allocations may be accelerated or delayed at Liberum's sole discretion. The Appendix to this Announcement contains the detailed terms and conditions of the Placing. The Placing is not being underwritten by Liberum or any other person. Details of the number of Placing Shares conditionally placed with institutional and other investors pursuant to the Placing and gross proceeds will be announced as soon as practicable after the close of the Accelerated Bookbuild process.
Qualifying investors who are invited, and who choose, to participate in the Placing by making an oral and legally binding offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety, including the Appendix, and to be making such offer on the terms and subject to the conditions contained herein and to be making the representations, warranties, undertakings and acknowledgements contained in the Appendix to this Announcement.
The Placing Shares will be issued credited as fully paid and will rank pari passu with the Existing Ordinary Shares, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of such shares after the date of their issue.
Your attention is drawn to the detailed terms and conditions of the Placing described in the Appendix to this Announcement (which forms part of this Announcement).
5. Principal terms of the Open Offer
Subject to the fulfilment of the conditions set out below, holders of Existing Ordinary Shares (excluding Solenta, and shareholders in the Company who are expected to participate in the Placing and certain other Shareholders who have agreed to not participate in the Open Offer who, in aggregate, hold 88.4 per cent. of the Existing Ordinary Shares) (the "Qualifying Shareholders") are being given the opportunity to subscribe for new Ordinary Shares under the Open Offer ("Open Offer Shares") at the Issue Price pro rata to their holdings of Existing Ordinary Shares on the record date on the basis of:
57 Open Offer Shares for every 10 Existing Ordinary Shares
Entitlements under the Open Offer ("Open Offer Entitlements") will be rounded down to the nearest whole number of Open Offer Shares.
Assuming full take-up under the Open Offer, the issue of the Open Offer Shares will raise further gross proceeds of approximately GBP4.1 million (approximately US$5.3 million) for the Company. The Open Offer is not underwritten.
Following the issue of the Placing Shares, the Liberum Shares and Solenta Investment Shares pursuant to the Equity Refinancing (and assuming the Open Offer is taken up in full), Qualifying Shareholders who take up their full entitlements in respect of the Open Offer will undergo a dilution of up to 15 per cent. to their interests in the Company because of the Solenta Investment. Qualifying Shareholders who do not take up any of their full entitlements in respect of the Open Offer will experience a greater dilution to their interests in the Company.
The Open Offer is conditional, inter alia, on (i) the completion of the Equity Refinancing and (ii) the Solenta Subscription Letter becoming unconditional in all respects.
If the Open Offer does not proceed any applications made by Qualifying Shareholders will be rejected and application monies will be returned without payment of interest as soon as practicable. The Open Offer Shares will, upon issue, rank pari passu with the Placing Shares, the Liberum Shares, the Solenta Investment Shares and the Existing Ordinary Shares and therefore rank equally for all dividends or other distributions declared, made or paid after their date of issue. No temporary documents of title will be issued.
Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating the Open Offer Entitlements.
It should be noted that the Open Offer is not a rights issue. Accordingly, the application form in respect of the Open Offer is not a document of title and cannot be traded. Any Open Offer Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not take up their rights to subscribe under the Open Offer.
Details and timetable of the Open Offer will be set out in the Circular and the timetable for the Open Offer will also be announced to the market at that time.
6. Uses of the Equity Refinancing
The Company intends to use the Equity Refinancing to restructure the balance sheet by bringing current creditors up to date and significantly reducing the long term debt burden and the associated servicing costs; support the incurred costs required to settle Continuing Group liabilities arising from the decision to stop all funding to fastjet Tanzania; and provide sufficient working capital until the end of 2019.
The Board intends to apply the proceeds of the Equity Refinancing as follows:
-- US$12.0 million of equity issued to Solenta for the acquisition of four Embraer 145s (and associated early termination lease charges) to be deployed in Zimbabwe, as fastjet intends to localise assets; US$10.4 million of equity issued to convert a significant portion of long term debt from Solenta (total principal debt of US$12.0 million), reducing the Company's indebtedness to Solenta and the associated servicing costs;
-- US$6.6 million of cash to settle all current short-term hard currency creditors;
-- up to US$3.7 million of cash to cover major creditor settlements associated with the decision to stop funding to fastjet Tanzania;
-- US$2.8 million of cash to fund Mozambique losses, as operations remain in early stage development;
-- US$2.5 million of cash to settle hard currency creditors in Zimbabwe, providing contingency for currency repatriation;
-- US$2.0 million of equity to settle the Professional Fees Payment; and
-- up to US$5.3 million for general working capital purposes across the Group depending on uptake of the Open Offer.
7. Trading and Outlook
Trading for the four months ending October 2018 reflected improving results for fastjet's Zimbabwean and Mozambique businesses, with these businesses delivering an improvement of 10 per cent. and 21 per cent. respectively in revenue per available seat, when compared to H1 of this year (ending June 2018). Zimbabwe is traded profitably for the four-months ending October 2018 whilst Mozambique, a new market, is developing according to expectations.
Trading within FedAir, fastjet's South African platform, for the nine months ending September 2018 has been according to management expectations, with the Company delivering a pre-tax profit margin of 9.5 per cent. on turnover of $9.2 million.
Trading in Tanzania for the period July to October 2018 has been impacted by additional capacity being added by Air Tanzania at below cost yields and ongoing delays in route approvals experienced in the country, serving to delay the originally anticipated deployment of ATRs by fastjet in Tanzania. Accordingly, whilst the Company was able to grow average fares by 31 per cent., load factors declined from the 74 per cent. achieved in H1 2018 to 63 per cent. for the four months to October 2018.
From a forward-looking perspective load factors and average fares in Zimbabwe, Mozambique and South Africa are expected to be strong during the seasonally higher demand in late-November and December trading periods. Although marginal upward cost-pressure may be expected due to upwards trends in global oil prices, higher average fares expected during the period through to 31 December 2018 is expected to offset increases in fuel prices.
As announced by the Company on 29 June 2018, in order to help the working capital shortfall resulting from the unforeseen events in 2017, the Company entered into unsecured loan agreements with Annunaki and SSCG. The loan agreements were on commercial terms and allowed the Company to lend US$5 million cash from fastjet Zimbabwe to Annunaki in return for a US$2 million loan to fastjet from SSCG for general working capital purposes across the Group (the "Unsecured Loans"). The Unsecured Loans are payable by the Company in December 2018. The Company confirms that it is in discussions with SSCG and Annunaki and expects that the terms of the Unsecured Loans will be extended beyond December 2018.
In light of the proposed Equity Refinancing and current trading of the Company, the Board intend to strengthen the composition of the Board going forward.
8. Aircraft Acquisition
It is proposed that fastjet Zimbabwe or another Group company acquires four Embraer 145s (three currently in use by the Group and one available as back-up) from Solenta and settles three months' early termination charges in consideration for the issue by the Company to Solenta of 937,421,875 Solenta Investment Shares credited as fully paid. The proposed transaction values the four Embraer 145s (including the associated early termination lease charges) at US$12.0 million.
Under the 2006 Act, shareholder approval is required for arrangements under which a company buys or sells, or is to buy or sell, a substantial non-cash asset (as defined in the 2006 Act) from or to, amongst others, a person connected with a director of the company. An asset is a substantial asset in relation to a company within the meaning of the 2006 Act if its value exceeds either (i) 10 per cent. of the company's asset value and is more than GBP5,000 or (ii) GBP100,000. Solenta is a company connected with Mark Hurst, a director of the Company. The Aircraft Acquisition by the Group from Solenta will therefore require Shareholders' approval and such approval has been included in the Authorising Resolution.
9. Related Party Transactions
Solenta
Solenta is considered to be a related party to the Company by virtue of Solenta being a "substantial shareholder" as defined in the AIM Rules for Companies. As such, the Solenta Investment is deemed to be a related party transaction as per the AIM Rules for Companies.
Tanzania MBO
The members of the management team of fastjet Tanzania, (being Hein Kaiser and Lawrence Masha), by virtue of being directors of a subsidiary undertaking of the Company, are considered related parties under the AIM Rules for Companies.
Fair and reasonable statement
The Directors (excluding Mark Hurst who has been appointed to the Board by Solenta), having consulted with the Company's nominated adviser, Liberum, consider that the terms of the Solenta Investment and the Placing are fair and reasonable insofar as the Company is concerned.
All of the Directors, having consulted with the Company's nominated adviser, Liberum, consider that the terms of the Tanzania MBO are fair and reasonable insofar as the Company is concerned.
10. Working capital
The Directors believe that following receipt of the proceeds of the Equity Refinancing and the Open Offer, the Company will have sufficient working capital to finance its operations for at least the next 12 months following Admission.
11. Rule 9 of the Code
The Code is issued and administered by the Panel. The Code and the Panel operate to ensure fair and equal treatment of shareholders in relation to takeovers, and also provide an orderly framework within which takeovers are conducted. The Code applies to the Company, and as such its shareholders are entitled to the protections afforded by the Code.
Under Rule 9 of the Code, where any person acquires, whether by a series of transactions over a period of time or by one specific transaction, an interest (as defined in the Code) in shares which (taken together with shares in which he is already interested and in which persons acting in concert with him are interested) carry 30 per cent., or more of the voting rights of a company that is subject to the Code, that person is normally required by the Panel to make a general offer to all remaining shareholders of that company to acquire their shares.
Similarly, where any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent., of the voting rights of a company, but does not hold shares carrying more than 50 per cent., of the voting rights of that company and such person or any such person acting in concert with him acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested, such person or persons acting in concert with him will normally be required to make a general offer to all remaining shareholders to acquire their shares.
An offer under Rule 9 of the Code must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during 12 months prior to the announcement of the offer.
Under Note 1 of the Notes of the Dispensations from Rule 9, the Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 if, inter alia, those shareholders of the company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him and do not have any interest in the transaction which may compromise their independence (the "Independent Shareholders") pass an ordinary resolution on a poll at a general meeting (a "Whitewash Resolution") approving such a waiver.
Under Note 5 of the Notes of the Dispensations from Rule 9, the Panel may waive the requirement for a "Whitewash" resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Code) if Independent Shareholders holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they approve such a waiver and would vote in favour of a Whitewash Resolution were one to be put to the shareholders of the company at a general meeting.
The effect of the Solenta Investment on Solenta's interests in Ordinary Shares will be as set out in the table below:
Hot Features
Premium
Number Percentage New Ordinary Number of Percentage Percentage
of Existing of Issued Shares Ordinary of Issued of Issued
Ordinary Voting to be issued Shares held Voting Shares Voting Shares
Shares Shares through following in the Enlarged in the Enlarged
held the Solenta the Equity Share Capital Share Capital
Investment Refinancing following following
the Equity the Equity
Refinancing Refinancing
and Open
Offer*
Solenta 185,192,066 29.8% 2,070,312,500 2,255,504,566 60.2% 54.3%
*assuming take-up in full of the Open Offer
The Company has obtained confirmation in writing from the following independent Shareholders, who in aggregate hold 281,645,826 Ordinary Shares in the Company representing 64.7 per cent. of the Ordinary Shares being capable of being voted on a "Whitewash" resolution, that each of the independent Shareholders approves such a waiver and would, amongst other things, vote in favour of the Whitewash Resolution were such a resolution to be put to Shareholders at a general meeting:
Shareholder Number of Existing Voting rights Voting rights
Ordinary Shares in Existing Ordinary in Existing Ordinary
held Shares (excluding Shares (excluding
shares held in shares held by
treasury) (%) Solenta and in
treasury (%))
M&G Investment
Management 123,501,153 19.9 28.4
Majedie Asset Management 61,628,285 9.9 14.2
Janus Henderson
Investors 58,693,665 9.5 13.5
JO Hambro Capital
Management 37,822,723 6.1 8.7
-------------------------- ------------------- ---------------------- ----------------------
Total 281,645,826 45.4 64.7
-------------------------- ------------------- ---------------------- ----------------------
Accordingly, the Panel Executive has waived the requirement for Solenta to make a general offer under Rule 9 of the Code to the extent that such obligation would otherwise arise as a result of the issue of up to 2,070,312,500 Solenta Investment Shares to Solenta pursuant to the Solenta Investment.
By virtue of the fact that, as consequence of the Solenta Investment, Solenta will hold more than 50 per cent. of the voting rights of the Company, Solenta will be able to acquire further interests in Ordinary Shares without incurring any obligation to make a general offer under Rule 9.1 of the Code.
12. Application for Admission to trading on AIM
Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM. The New Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares following Admission.
It is expected that the Admission will become effective and that dealings for normal settlement in the New Shares on AIM will commence at 8.00 am on 10 December 2018.
13. General Meeting
The Circular which will contain a notice convening a General Meeting of the Company, which is expected to be held at the offices of Liberum at Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY at 10.00 a.m. on 7 December 2018 is expected to be sent to Shareholders on 21 November 2018. A copy of the Circular will also be made available at the Company's website, (www.fastjet.com).
14. Directors' Recommendation
The Directors (excluding Mark Hurst who has been appointed to the Board by Solenta) consider the Equity Refinancing and the Open Offer to be in the best interests of the Company and its Shareholders as a whole and recommend that Shareholders vote in favour of all the resolutions proposed at the General Meeting but, in particular, the Authorising Resolution.
Nico Bezuidenhout and Robert Burnham, Directors who are also Shareholders and therefore able to vote, have confirmed their intention to vote in favour of the resolutions to be proposed at the General Meeting in respect of their combined holdings which total 125,994 Existing Ordinary Shares, representing approximately 0.02 per cent. of the Existing Ordinary Shares (excluding treasury shares).
Information to Distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, Distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Liberum will only procure investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.
Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.
APPIX I: TERMS AND CONDITIONS OF THE PLACING
THIS ANNOUNCEMENT, INCLUDING THIS APPIX (TOGETHER, THE "ANNOUNCEMENT") AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND ARE "QUALIFIED INVESTORS" AS DEFINED IN ARTICLE 2.1(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE PROSPECTUS DIRECTIVE); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS AND: (I) "INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE ORDER); (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.") OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS RELEVANT PERSONS). THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED (THE SECURITIES ACT), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR AS PART OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NO OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.
Persons who are invited to and who choose to participate in the Placing, by making (or on whose behalf there is made) an oral or written offer to subscribe for Placing Shares (the Placees), will be deemed to have read and understood this Announcement, including this Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in this Appendix. In particular each such Placee represents, warrants and acknowledges to the Company and the Bookrunner that:
1. it is a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
2. in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors or in circumstances in which the prior consent of the Bookrunner has been given to the offer or resale; or (ii) where Placing Shares have been acquired by it on behalf of persons in any member state of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons;
3. it is acquiring the Placing Shares in an "offshore transaction" as defined in and pursuant to Regulation S under the Securities Act; and
4. it understands (or if acting for the account of another person, such person has confirmed that such person understands) the resale and transfer restrictions set out in this Appendix.
The Company and the Bookrunner will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
This Announcement does not constitute an offer, and may not be used in connection with an offer, to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Australia, Canada, Japan or the Republic of South Africa or in any other jurisdiction in which such publication or distribution is unlawful. Persons into whose possession this Announcement may come are required by the Company to inform themselves about and to observe any restrictions of transfer of this Announcement. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or any laws of or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold only outside the United States in accordance with Regulation S.
The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance or the South African Reserve Bank; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any action.
This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.
By participating in the Placing, each person who is invited to and who chooses to participate in the Placing will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in this Appendix.
In this Appendix, unless the context otherwise requires, "Placee" means a Relevant Person (including individuals, funds or others) on whose behalf a commitment to subscribe for Placing Shares has been given.
Details of the Placing Agreement and the Placing Shares
Liberum has entered into the Placing Agreement with the Company under which Liberum has conditionally agreed on the terms and subject to the conditions set out therein, as agent for the Company, to use its reasonable endeavours to place the Placing Shares at the Issue Price with certain institutional investors. The Placing is not being underwritten by Liberum or any other person.
The number of Placing Shares at the Issue Price will be determined following completion of the Accelerated Bookbuild as set out in this Announcement.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of the Existing Ordinary Shares after the date of issue of the Placing Shares.
The Company has agreed that it will not, for 180 days following the date of this Announcement, issue or agree to issue new Ordinary Shares or grant any subscription, conversion rights or other equity securities save with the prior written consent of Liberum.
Application for admission to trading
Application will be made for admission of the Placing Shares to trading on AIM. It is expected that settlement of any such shares and Admission will become effective on or around 8.00 am on 10 December 2018 and that dealings in the Placing Shares will commence at that time.
Accelerated Bookbuild
The Bookrunner will today commence an Accelerated Bookbuilding process in respect to the Placing to determine demand for participation in the Placing by any Placees at the Issue Price. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Accelerated Bookbuild. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
The Bookrunner and the Company shall be entitled to effect the Placing (in whole or in part) by such alternative method to the Accelerated Bookbuild as they may, in their sole discretion, determine.
Participation in, and principal terms of, the Placing
1. Liberum is acting as nominated adviser and Bookrunner to the Placing, as agent for and on behalf of the Company. Liberum is authorised and regulated by the FCA, is acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Liberum or for providing advice in relation to the matters described in this Announcement.
2. The Bookrunner is arranging the Accelerated Bookbuild and Placing as an agent of the Company.
3. Participation in the Accelerated Bookbuild will only be available to persons who may lawfully be, and are, invited to participate by the Bookrunner. The Bookrunner and its affiliates are entitled to enter bids in the Accelerated Bookbuild as principal.
4. The Accelerated Bookbuild will establish the number of Placing Shares to be issued at the Issue Price, which will be agreed between the Bookrunner and the Company following completion of the Accelerated Bookbuild. The number of Placing Shares will be announced on a Regulatory Information Service following the completion of the Accelerated Bookbuild.
5. To bid in the Accelerated Bookbuild, prospective Placees should communicate their bid by telephone to their usual sales contact at Liberum. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Issue Price. Bids may be scaled down by the Bookrunner on the basis referred to paragraph 9 below.
6. The Accelerated Bookbuild is expected to close no later than 6.30 p.m. (London) today but may be closed earlier or later at the discretion of the Bookrunner. The Bookrunner may, in agreement with the Company, accept bids that are received after the Accelerated Bookbuild has closed.
7. Each Placee's allocation will be confirmed to Placees orally, or by email, by the Bookrunner whom they contact following the close of the Accelerated Bookbuild and a trade confirmation or contract note will be dispatched as soon as possible thereafter. The Bookrunner's oral or emailed confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of the Bookrunner and the Company, under which it agrees to subscribe for the number of Placing Shares allocated to it at the Issue Price on the terms and conditions set out in this Appendix (which are deemed to be incorporated in such trade confirmation or contract note) and in accordance with the Articles.
8. The Company will make a further announcement following the close of the Accelerated Bookbuild detailing the number of Placing Shares to be issued at the Issue Price.
9. Subject to paragraphs 5 and 6 above, the Bookrunner may choose to accept or reject bids, either in whole or in part, on the basis of allocations determined at its discretion (in consultation with the Company) and may scale down any bids for this purpose on such basis as they may determine. The Bookrunner may also, notwithstanding paragraphs 5 and 6 above, subject to the prior consent of the Company: (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time; and (ii) allocate Placing Shares after the Accelerated Bookbuild has closed to any person submitting a bid after that time.
10. A bid in the Accelerated Bookbuild will be made on the terms and subject to the conditions in this Announcement and will be legally binding on the Placee on behalf of which it is made and, except with the consent of the Bookrunner, will not be capable of variation or revocation after the time at which it is submitted. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Bookrunner, to pay to the Bookrunner (or as the Bookrunner may direct) in cleared funds an amount equal to the product of the Issue Price and the number of Placing Shares for which such Placee has agreed to subscribe. Each Placee's obligations will be owed to the Bookrunner.
11. Except as required by law or regulation, no press release or other announcement will be made by the Bookrunner or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.
12. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
13. All obligations under the Accelerated Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".
14. By participating in the Accelerated Bookbuild, each Placee agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
15. To the fullest extent permissible by law and the applicable rules of the FCA, neither Liberum nor any of its affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise whether or not a recipient of these terms and conditions) in respect of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and the Bookrunner shall have no liability to the Placees for the failure of the Company to fulfil those obligations. In particular, neither Liberum nor any of its affiliates shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of the Bookrunner's conduct of the Accelerated Bookbuild or of such alternative method of effecting the Placing (in whole or in part) as the Bookrunner and the Company may agree.
Conditions of the Placing
Completion of the Placing is conditional on, inter alia:
(a) the passing of the authorising resolutions at the General Meeting of the Company expected to be held on 7 December 2018;
(b) the Company having complied with its obligations under the Placing Agreement to the extent that such obligations fall to be performed prior to Admission;
(c) none of the warranties in the Placing Agreement being untrue, inaccurate or misleading;
(d) the Solenta Subscription Letter becoming unconditional in all respects; (e) the Placing Agreement not having been terminated in accordance with its terms; and
(f) Admission becoming effective by no later than 8.00 a.m. on 10 December 2018 (or such later date as the Company and the Bookrunner may agree (being not later than 8.00 am on 24 December 2018).
If: (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Bookrunner by the respective time or date where specified (or such later time or date as the Company and the Bookrunner may agree, but not being later than 8.00 am on 24 December 2018); (ii) any of such conditions becomes incapable of being fulfilled; or (iii) the Placing Agreement is terminated in its entirety in the circumstances specified below, the Placing will lapse and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee against the Bookrunner in respect thereof.
The Bookrunner may, at its discretion and upon such terms as it thinks fit, waive, or extend the period for, compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement save that the above condition relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
Neither Liberum nor the Company shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing, each Placee agrees that any such decision is within the absolute discretion of the Bookrunner.
Right to terminate under the Placing Agreement
The Bookrunner is entitled, at any time before Admission, to terminate its obligations under the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:
(a) a breach of the warranties given by the Company in the Placing Agreement; or
(b) a material breach by the Company of any of its obligations under the Placing Agreement; or
(c) in the Bookrunner's opinion, there having been a material adverse change in the financial position, business or prospects of the Group; or
(d) the occurrence of a force majeure event which, in the opinion of the Bookrunner, makes it impractical or inadvisable to proceed with the Placing.
Following Admission, the Placing Agreement is not capable of termination to the extent that it relates to the Placing of the Placing Shares. The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by the Bookrunner of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Bookrunner, and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise.
No Prospectus
The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require a prospectus in the United Kingdom or in any other jurisdiction. No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA in relation to the Placing, and any Placees' commitments will be made solely on the basis of the information contained in the Announcement (including this Appendix) and the Exchange Information (as defined further below).
Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or Liberum or any other person and neither the Bookrunner nor the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by any of the Bookrunner, the Company, or their respective officers, directors, employees or agents.
Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Neither the Company nor the Bookrunner is making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. No Placee should consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN: GB00BWGCH354) following Admission will take place within the system administered by Euroclear UK & Ireland Limited (CREST) provided that, subject to certain exceptions, the Bookrunner reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that they deem necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.
Following the close of the Accelerated Bookbuild, each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note in accordance with the standing arrangements in place with the Bookrunner, stating the number of Placing Shares allocated to it at the Issue Price, the aggregate amount owed by such Placee to the Bookrunner (in GBP) and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with the Bookrunner.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two (2) percentage points above LIBOR as determined by the Bookrunner.
Each Placee is deemed to agree that, if it does not comply with these obligations, the Bookrunner may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Bookrunner's account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares, each Placee confers on the Bookrunner all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which the Bookrunner lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations, Warranties and Further Terms
By participating in the Placing each Placee (and any person acting on such Placee's behalf) makes the following representations, warranties, acknowledgements, agreements and undertakings (as the case may be) to the Company and the Bookrunner:
1. represents and warrants that it has read and understood this Announcement, including the Appendix, in its entirety and that its subscription for Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and undertakes not to redistribute or duplicate this Announcement;
2. acknowledges that no offering document, admission document or prospectus has been prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus, admission document or other offering document in connection therewith;
3. acknowledges that the Existing Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules and EU Regulation 596/2014 (collectively "Exchange Information");
4. acknowledges that none of Liberum, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided, and will not provide it, with any material regarding the Placing Shares or the Company other than this Announcement; nor has it requested any of Liberum, the Company, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;
5. acknowledges that the content of this Announcement is exclusively the responsibility of the Company, and that none of Liberum, their respective affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or concurrently published by or on behalf of the Company, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire the Placing Shares is contained in this Announcement and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of Liberum or the Company, or, if received, it has not relied upon any such information, representations, warranties or statements (including any management presentation that may have been received by any prospective Placee) and neither Liberum nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied solely on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and it will not rely on any investigation that Liberum, its affiliates or any person acting on behalf of any of them has or may have conducted;
6. represents and warrants that it has neither received nor relied on any unpublished price sensitive information concerning the Company in accepting this invitation to participate in the Placing;
7. acknowledges that none of Liberum, its affiliates or any person acting on behalf of any of them has or shall have any liability for the Exchange Information, any publicly available or filed information or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;
8. represents and warrants that it is acquiring the Placing Shares in an "offshore transaction" as defined in and pursuant Regulation S under the Securities Act;
9. acknowledges that it is acquiring the Placing Shares for its own account or for one or more accounts for which, in each case, it exercises sole investment discretion, for investment purposes and not with a view to any distribution or for resale in connection with, the distribution thereof in whole or in part, in the United States and that it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account;
10. acknowledges that the Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, and agrees not to reoffer, resell, pledge or otherwise transfer the Placing Shares except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;
11. unless otherwise specifically agreed in writing with Liberum, represents and warrants that neither it nor the beneficial owner of such Placing Shares will be a resident of the United States, Australia, Canada, Japan or the Republic of South Africa;
12. acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, Japan or the Republic of South Africa and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions;
13. represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system;
14. represents and warrants that: (i) it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and (ii) it is not a person: (a) with whom transactions are prohibited under the Foreign Corrupt Practices Act of 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the U.S. Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the Regulations); and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such purchase, and it will provide promptly to the Bookrunner such evidence, if any, as to the identity or location or legal status of any person which the Bookrunner may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by the Bookrunner on the basis that any failure by it to do so may result in the number of Placing Shares that are to be purchased by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as the Bookrunner may decide at its sole discretion;
15. if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of the Bookrunner has been given to the offer or resale;
16. represents and warrants that it has not offered or sold and, prior to the expiry of a period of six (6) months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 (FSMA);
17. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive;
18. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to the Placing Shares in circumstances which do not require the approval of the communication by an authorised person under section 21(1) of the FSMA;
19. represents and warrants that it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;
20. if in a Member State of the European Economic Area, unless otherwise specifically agreed with Liberum in writing, represents and warrants that it is a Qualified Investor within the meaning of the Prospectus Directive;
21. if in the United Kingdom, represents and warrants that it is a Qualified Investor and a person: (i) who is an investment professionals within the meaning of Article 19(5) of the Order; (ii) who falls within Article 49(2)(A) to (D) ("High Net Worth Companies, Unincorporated Associations, etc.") of the Order; or (iii) to whom this Announcement may otherwise be lawfully communicated;
22. represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities and taken any other necessary actions to enable it to commit to this participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) and will honour such obligations;
23. where it is acquiring Placing Shares for one or more managed accounts, represents and warrants that it is authorised in writing by each managed account: (a) to acquire the Placing Shares for each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in this Appendix and the Announcement of which it forms part; and (c) to receive on its behalf any investment letter relating to the Placing in the form provided to you by the Bookrunner;
24. undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Bookrunner may in its sole discretion determine and without liability to such Placee and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to or referred to in these terms and conditions) which may arise upon the placing or sale of such Placee's Placing Shares on its behalf;
25. acknowledges that none of Liberum, its affiliates, or any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be treated for these purposes as a client of Liberum and that Liberum has no duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
26. undertakes that the person whom it specifies for registration as the holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. None of Liberum nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company, Liberum in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of Liberum who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;
27. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Liberum in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
28. acknowledges that time shall be of the essence as regards to obligations pursuant to this Appendix to the Announcement;
29. agrees it will be bound by the terms of the Company's Articles of Association;
30. agrees that the Company, Liberum, and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Bookrunner on their own behalf and on behalf of the Company and are irrevocable and are irrevocably authorised to produce this Announcement or a copy thereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;
31. agrees to indemnify on an after-tax basis and hold the Company, Liberum and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;
32. acknowledges that no action has been or will be taken by any of the Company, Liberum or any person acting on behalf of the Company or Liberum that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;
33. acknowledges that it is an institution that has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and it, and any accounts for which it may be acting, are able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved; and
34. acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the trade confirmation or contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing.
The representations, warranties, acknowledgments and undertakings contained in this Appendix are given to the Bookrunner for itself and on behalf of the Company and are irrevocable.
The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Liberum will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Liberum in the event that any of the Company and/or Liberum has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Bookrunner accordingly.
In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that the Bookrunner does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that Liberum or any of its affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with the Bookrunner, any money held in an account with the Bookrunner on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Bookrunner's money in accordance with the client money rules and will be used by the Bookrunner in the course of their own business and the Placee will rank only as a general creditor of the Bookrunner.
All times and dates in this Announcement may be subject to amendment. The Bookrunner shall notify the Placees and any person acting on behalf of the Placees of any changes.
No statement in this Announcement is intended to be a profit forecast, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.
The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.
APPIX II
DEFINITIONS
2006 Act the UK Companies Act 2006
Accelerated Bookbuild the Placing which is being conducted by
way of an accelerated bookbuild
Admission the admission to trading on AIM of the
New Shares, which is expected to take place
on 10 December 2018
AFL Aircraft and Facilities Limited
AFL Settlement Agreement the settlement agreement dated 16 November
2018 between (i) the Company, (ii) Solenta
and (iii) AFL relating to the Facility
Agreement
AIM the market of that name operated by the
London Stock Exchange
AIM Rules for Companies the AIM rules for Companies, as published
and amended from time by the London Stock
Exchange
AIM Rules for Nominated the rules for nominated advisers to AIM
Advisers companies, as published and amended from
time to time by the London Stock Exchange
Aircraft Acquisition the proposed acquisition by the Group of
four (4) Embraer aircraft currently in
use by the Group from Solenta (and associated
early termination lease charges) in consideration
for the issue by the Company to Solenta
Aviation of the Aircraft Acquisition Shares
credited as fully paid, valuing such acquisition
at US$12 million
Annunaki Annunaki Investments (Private) Limited
Application Form the application form which accompanies
the Circular on which Qualifying non-CREST
Shareholders may apply for Open Offer Shares
under the Open Offer
Articles the articles of association of the Company
as at the date of this Announcement, as
amended from time to time
ATRs the ATR 72-600 aircraft
Authorising Resolution the resolution to be put to Shareholders
at the General Meeting to approve the Equity
Refinancing and the Open Offer
Board or Directors the directors of fastjet
Bookrunner Liberum
Business Day any day on which banks are usually open
in England and Wales for transaction of
business, other than a Saturday, Sunday
or public holiday
Code the City Code on Takeovers and Mergers
issued by the Panel
Company or fastjet fastjet Plc
Continuing Group the Group excluding its interest in fastjet
Tanzania following the completion of the
Tanzania MBO
CREST the relevant system for the paperless settlement
of trades and the holding of uncertified
securities operated by Euroclear in accordance
with the CREST Regulations
CREST member a person who has been admitted by Euroclear
UK and Ireland as a system-member (as defined
in the CREST Regulations)
CREST participant a person who is, in relation to CREST,
a system participant (as defined in the
CREST Regulations)
CREST Regulations the Uncertificated Securities Regulations
2001, as amended
Embraer 145s the Embraer 145 aircraft
Embraer 190s the Embraer 190 aircraft
Enlarged Share Capital the issued ordinary share capital of the
Company immediately following Admission
Equity Refinancing together, the Placing, the Professional
Fees Payment and the Solenta Investment
Euroclear UK & Ireland Euroclear UK & Ireland Limited, the operator
of CREST
Existing Loan Agreement the existing loan in the principal amount
of US$12 million from Solenta to the Company
made pursuant to the shareholder loan facility
agreement dated 4 April 2018
Existing Ordinary the 620,652,894 Ordinary Shares in issue
Shares as at the date of this Announcement
Facility Agreement the facility agreement dated 23 January
2017 between (i) AFL and (ii) Solenta
fastjet Africa fastjet Africa (Proprietary) Limited
fastjet Mozambique fastjet Mozambique Limited
fastjet Tanzania fastjet Airlines Limited
fastjet Zimbabwe fastjet Zimbabwe (Private) Limited
FCA the Financial Conduct Authority of the
United Kingdom
FedAir Federal Airlines Proprietary Limited
FSMA the Financial Services and Markets Act
2000, as amended
GECAS GE Capital Aviation Services
GECAS Condition the Company entering into a binding settlement
agreement with GECAS (or other of its subsidiary
companies)
General Meeting the general meeting of Shareholders which
is expected to be held at the offices of
Liberum at Ropemaker Place, 25 Ropemaker
Street, London EC2Y 9LY at 10.00 a.m. on
7 December 2018, notice of which will be
set out in the Circular
GECAS Settlement a legally binding settlement agreement
Agreement between GECAS and the Company
Group the Company, together with its subsidiary
undertakings
Heads of Agreement the heads of agreement between the Company
and Solenta Aviation dated 16 November
2018 in connection with the Solenta Investment
ISIN International Securities Identification
Number
Issue Price one penny per New Share
Liberum Liberum Capital Limited
Liberum Shares the 156,250,000 new Ordinary Shares to
be issued to Liberum in satisfaction of
the Professional Fees Payment
London Stock Exchange London Stock Exchange plc
New Shares together, the Placing Shares, the Liberum
Shares, the Open Offer Shares and the Solenta
Investment Shares
Notice of General the notice of General Meeting which will
Meeting be set out in the Circular
Open Offer the invitation to Qualifying Shareholders
to subscribe for the Open Offer Shares
at the Issue Price on the terms and subject
to the conditions set out in the Circular
and, in the case of Qualifying non-CREST
Shareholders only, the Application Form
Open Offer Entitlement the entitlement for Shareholders to subscribe
for Open Offer Shares allocated to Qualifying
Shareholders on the Record Date pursuant
to the Open Offer
Open Offer Shares the 411,440,871 new Ordinary Shares being
made available to Qualifying Shareholders
pursuant to the Open Offer
Ordinary Shares the ordinary shares of one penny each in
the capital of the Company
Overseas Shareholder a Shareholder who is resident, or who is
a citizen of, or who has a registered address
in a jurisdiction outside the United Kingdom
Panel the Panel on Takeovers and Mergers
Parrot Parrot Aviation Proprietary Limited
Placing the conditional placing of the Placing
Shares at the Issue Price by Liberum as
described in this Announcement
Placing Agreement the conditional agreement dated 16 November
2018 between the Company and Liberum relating
to the Placing
Placing Shares at least 898,437,499 new Ordinary Shares
which Liberum has conditionally agreed
to place with institutional and other investors
pursuant to the Placing
Professional Fees the issue of the Liberum Shares at the Issue
Payment Price to Liberum in payment of professional
fees due to Liberum from the Company in respect
of the Equity Refinancing and in accordance
with the terms and conditions of the Placing
Agreement
Qualifying non-CREST Qualifying Shareholders whose Existing
Shareholders Ordinary Shares on the register of members
of the Company at the close of business
on the Record Date were held in certificated
form
Qualifying Shareholders holders of Existing Ordinary Shares on
the register of members of the Company
at the Record Date, but excluding (i) any
Overseas Shareholders who are resident
in, or who are citizens of, or who have
a registered address in a Restricted Jurisdiction,
(ii) those Shareholders offered the opportunity
to participate in the Placing, (iii) Solenta
and (iv) Liberum
Record Date 6.00 p.m. on 20 November 2018
Regulatory Information has the meaning given under the AIM Rules
Service for Companies
Restricted Jurisdiction each and any of the United States of America,
Australia, Canada, Japan, New Zealand,
Russia, and the Republic of South Africa
and any other jurisdiction where extension
or availability of the Open Offer would
breach any applicable law or regulations
Rule 9 Rule 9 of the Code
Rule 9 Waiver the waiver granted by the Panel of the
obligation which might otherwise arise
under Rule 9 requiring Solenta to make
an offer for all of the issued share capital
of the Company in connection with the Solenta
Investment;
SSCG SSCG Africa Holdings
Shareholder a holder of Existing Ordinary Shares
Solenta Solenta Aviation Holdings Limited
Solenta Investment the investment of a total of US$26.5 million
in the Company by Solenta in accordance
with the terms and conditions of the Heads
of Agreement and the Solenta Subscription
Letter
Solenta Investment the 2,070,312,500 new Ordinary Shares to
Shares be issued to Solenta pursuant to the Solenta
Investment
Solenta Subscription the conditional subscription letter dated
Letter 16 November 2018 pursuant to which Solenta
will subscribe for the Solenta Investment
Shares
Stabilisation Plan the stabilisation plan of the Group as
previously announced by the Company
sterling, pounds the lawful currency of the United Kingdom
sterling, GBP, pence
or p
Tanzania MBO the disposal of the Company's interest
in in the holding company of fastjet Tanzania,
fastjet Air TZ (BVI) pursuant to a share
sale agreement dated 13 November 2018
UK or the United the United Kingdom of Great Britain and
Kingdom Northern Ireland
uncertificated or recorded on the relevant register or other
uncertificated form record of the Ordinary Shares or other
security concerned as being held in uncertificated
form in CREST, and title to which, by virtue
of the CREST Regulations, may be transferred
by means of CREST
United States or the United States of America, its territories
United States of and possessions, any state of the United
America or US States of America and the District of Columbia
and all areas subject to its jurisdiction
Unsecured Loans the loans between the Company and each
of Annunaki and SSCG
US$, USD or $ the lawful currency of the United States
The GBP/USD exchange used in respect of the Equity Refinancing and Open Offer is GBP1:US$1.28, being the closing exchange rate on 15 November 2018.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IOELLFVDLSLRLIT
(END) Dow Jones Newswires
November 16, 2018 12:38 ET (17:38 GMT)
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