Why has Jet2 raised £422-mn via share placement? 

 

UK-based airline company Jet2 PLC (LON: JET2) announced it had raised £422 million (US $582 million) through an equity share issuance for bridging its liquidity challenges in case of an extended and unpredictable coronavirus-related lockdown. The fundraising activity followed the UK government’s recent announcement advising against non-essential travel and its changing travel guidelines. 

Want to know more? Do Read: How will new hotel quarantine rules impact aviation and hospitality sectors? 

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Fundraising details 

The airline carrier reported it had issued 35 million placing shares and 593,561 retail share subscriptions priced at US $11.80 per share. The pricing of the equity issuance implied the subscriptions were offered at a discount of almost 9.1 per cent from the company’s closing price as of 11 February. The company added that the fundraise was significantly oversubscribed. 

 

Want to know more? Do Read: Overview Of The Aviation Industry In The UK 

 

The company’s newly issued funds accounted for about 20 per cent of its existing share capital. Investment banks, Canaccord Genuity (TSE: CF) and Jefferies (NYSE: JEF), were the joint global coordinators, joint bookrunners and joint brokers for the placement shares. London-based financial services company Cenkos Securities (LON: CNKS) was the nominated adviser to the airline. 

 

Want to know more? Do Read: Ryanair (LON: RYA) Sinks into Losses in Q3 2021 

 

Five of the leisure travel company’s directors and executive chairman Philip Meeson bought shares from the fundraising activity. Meeson’s 47.3 million share subscription led to him holding a 22 per cent stake in the firm, whereas two directors received a 0.1 per cent shareholding each. Moreover, the three other director’s share subscription resulted in them having a shareholding of less than 0.1 per cent each. 

 

Travel guidelines impact 

The government’s changing and strict travel measures resulted in the company’s cautions approach to the upcoming summer holidays this year. Evolving measures include travel advisory against non-essential travel, proof of a Covid negative test to enter the UK and a five-day quarantine with another Covid negative test or a ten-day quarantine for those returning from foreign travel. 

 

Stock price performance 

The airline company’s stock (LON: JET2) was trading at GBX 1,202, down by 7.40 per cent as of 12 February at 12:27 pm GMT. In comparison, the broader index FTSE AIM UK 50 Index shares were almost flat at GBX 6,791.94, up marginally 0.05 per cent for the same period.  

 

The financial services firms which facilitated the fundraise witnessed a mixed market reaction. The NYSE-listed company, Jefferies Financial (NYSE: JEF), was trading at US $28.54, up by 3.59 per cent, while Canadian company Canaccord Genuity (TSE: CF) shares stood at CAD $12.84, down by 1.23 per cent for the same period.  

 

Moreover, UK bank Cenkos Securities (LON: CNKS) shares were down 0.75 per cent at GBX 66.00 for the same period.