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  • Webjet (WEB) has completed its institutional placement and the institutional component of its entitlement offer, raising $231 million
  • A further $115 million is expected to be raised next week from the retail component of the entitlement offer
  • The company had originally projected to raise a total of $332 million, but could now raise up to $346 million — $14 million more than expected thanks to an expansion of the institutional placement
  • Bain Capital is the biggest new player — standing to take a 16 per cent stake, pending the approval of all share acquisitions
  • Webjet’s Managing Director John Guscic says the equity raise will help the company weather the severe disruption COVID-19 has caused
  • Webjet shares were priced 26.1 per cent lower at market close on Thursday at $2.78 per share

Webjet (WEB) has completed its institutional placement and the institutional component of its entitlement offer, raising $231 million.

A further $115 million is expected to be raised next week from the retail component of the entitlement offer.

The company had originally projected to raise a total of $332 million, but could now raise up to $346 million — $14 million more than expected thanks to an expansion of the institutional placement.

Institutional placement

A original target of $101 million was to be raised from the institutional placement. The placement instead raised a total of $115 million following strong demand from existing and new investors.

Bain Capital was the biggest new entry under the deal – having subscribed for $25 million of shares (14.7 million new shares) in the placement, equating to 6% of Webjet shares at the end of the equity raising process.

Bain also came in as a sub-underwriter for a hefty portion of the entitlement offer.

Institutional entitlement offer

The institutional entitlement offer also enjoyed strong interest, with 90% of eligible shareholders electing to take up their rights. It raised approximately $115 million.

Bain Capital has also struck a sub-underwriting agreement for a total of 38 million shares under the entitlement offer. 26 million of those are subject to approval by the Foreign Investment Review Board, but barring any complications, Bain’s total holdings would represent up to 16% of Webjet shares after the completion of the equity raising – a potential commitment of up to an additional $65 million.

The joint lead managers, Goldman Sachs, Credit Suisse and Ord Minnett, have agreed to fully underwrite both the institutional component of the entitlement offer and the retail offer.

Retail entitlement offer

A new retail entitlement offer will open on April 8 and close April 21. Eligible retail shareholders will be able to subscribe for one new share for every share already held in Webjet as at 7:00 pm (AEDT) on April 3, at the same price as the institutional entitlement offer of $1.70 per share. The offer price of $1.70 per share represents a 32.2% discount to the theoretical ex-rights price of $2.51.

Eligible retail shareholders will be allotted the new shares on April 28. New shares issued as part of the retail entitlement offer are expected to commence trading on April 29.

Webjet expects to raise an additional $115 million from the retail offer.

Ready for take-off

Now all components of the placement and entitlement offer are fully underwritten, Webjet anticipates the equity raising to total approximately $346 million in gross proceeds. The original minimum expectation was $275 million. This potential surplus of $71 million serves to strengthen Webjet’s position going forward.

Original minimum projections would’ve put Webjet in a position to be able to function until the end of 2020, even with severe travel restrictions still in place. The $275 million would’ve fixed Webjet’s balance sheet, with net debt reduced from $135 million to a net cash position of $140 million. The extra $71 million provides the company with enhanced liquidity as it navigates the perils of the pandemic.

Alongside other cost-saving measures amid the crisis, Webjet’s Managing Director John Guscic says the equity raise will help the company weather the severe disruption COVID-19 has caused in the travel industry.

“As the travel landscape recovers, this equity will help the company emerge in a strong position relative to its competitors […] and pursue our previously stated growth objectives and benefit from the changes in the competitive landscape.”

Webjet shares were priced 26.1 per cent lower at market close on Thursday at $2.78 per share.

WEB by the numbers
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