Business Weekly - Cambridge, UK

Bullish: Silverjet CEO, Lawrence Hunt

Under a newly signed Memorandum of Understanding (MoU), the investor will initially provide around $25m (£12.7m) by means of debt and equity, taking a 28 per cent stake in the dedicated business class airline.

While the MoU also sets out the intent by the Investor to invest up to a further $75m (£38.1m) in the ongoing development of Silverjet, the airline is yet to confirm whether this would include a further equity stake and ultimately a takeover.

Flying from London Luton to Newark, New York, and Dubai, Silverjet is the lone survivor from a class of three business class, transatlantic carriers to have launched from the East of England in the last two years – the others, Eos and MAXjet, flew out of London Stansted.

The global credit crunch and rising fuel costs pushed Eos and MAXjet into bankruptcy, though MAXjet has relaunched as a charter service following its acquisition by US universities travel provider, NCA Sports Group.

Silverjet, the only UK business of the three, looked set to emulate its competitors following deterioration in working capital and limited residual reserves, also due to fuel prices and a tightening in the credit climate.

In recent months it had experienced a number of set backs with major investor HBOS pulling out, the Reuben brothers announcing they would not be converting a £10m loan into a 20 per cent stake in the airline and full year results that failed to break even due to rising fuel costs despite a growth in passenger figures.

The new equity stake will be prescribed at 17p, up 17.24 per cent on the days starting price of 14.5p a share, a long way below its all time high of 206.5p achieved a little over a year ago.

The airline anticipates that the equity element will amount to approximately $8.0m (£4.1m), representing approximately 28 per cent of the enlarged share capital. It is expected that a debt facility will be made available to the airline imminently.

As well as the airline’s ongoing development, the extra $75m is earmarked for the international rollout of the Silverjet brand and concept into new markets within the Middle East, the Far East and Africa.

“This investment places Silverjet in a strong position to further develop our brand and proposition,” said Silverjet CEO, Lawrence Hunt. “It is particularly encouraging to have secured this agreement in a challenging environment for all airlines.”

The danger hasn’t completely passed though and though Silverjet says that completion of these agreements will secure its future and long term development, it adds that in the “unlikely” event that they are not completed, it will have to source alternative means of funding as “a matter of urgency.”

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