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Troubled airline seeks amends with memorandum of understanding

by Rachel Robson

Business class only airline Silverjet, which has frequently been criticised about its financial position over recent months, is attempting to make amends after entering into a memorandum of understanding (MOU) with a UAE-based investor.

The deal follows last December’s loan of £10 million by the Reuben Brothers. Silverjet’s working capital has been placed under increasing pressure on the back of fuel price hikes and tightening of credit conditions in the airline industry, and its residual reserves are limited. The MOU provides that approximately $25 million will initially be invested directly in Silverjet by means of debt and equity. The equity element is expected to come to around $8 million which will be subscribed at 17p per share.

As a result, the new ordinary shares will represent around 28% of the enlarged share capital. A debt facility is expected to be made available to the company shortly. The investor will also put up a further $75 million in the ongoing development of Silverjet and will participate in the international roll out of the airline’s brand and concept into new markets within the Middle East, the Far East and Africa.

‘The board believes that the combination of Silverjet’s already strong brand and presence in the market with the support of a long-term strategic investor will enable Silverjet to continue its growth and success achieved to date,’ says chief executive Lawrence Hunt. The airline added that it was still in discussions regarding a possible takeover, although no further details could be disclosed.

Shares says: A promising outcome but Silverjet is not out of the woods yet.