10th Mar 2014 11:14
LONDON (Alliance News) - Flybe Group PLC Monday said it raised gross proceeds of GBP155.65 million in its placing and open offer, hitting the target for the fund-raising.
The airline had said February 20 that it wanted to raise net proceeds of about GBP150 million by offering up to 141.5 million shares at 110 pence each through a placing and open offer, money it would use to strengthen its balance sheet and reduce its aircraft costs.
In a statement Monday, it said it got acceptances for 44.0 million of the 50.1 million open offer shares it offered, but the rest have been placed with Liberum, which was handling the offer.
It its previous statement, Flybe had said it will use the money to strengthen its balance sheet, particularly providing additional cash reserves that will protect it against unforeseen disruptions or occurrences. It will invest in IT and its finance functions, which should boost productivity and cut costs, enhance its customer service operations, and expand its branded route and base network in the UK over the next one-to-two years as well as expanding its white label product.
It will also use the funds to reduce its fleet ownership costs, moving towards full ownership of its aircraft rather than using operating leases. It said it will deploying capital to own aircraft with secured loans.
Flybe is going through a major restructuring programme as it tries to improve profitability and make itself competitive in a very intense UK aviation market. Last November, Flybe reported that it swung to a profit in the first half of its current financial year thanks to a jump in revenues and as its cost cutting and restructuring programme started to pay off, but new CEO Hammad announced a further revamp of the airline, including cutting 500 jobs, in an effort to ensure the recovery is sustained.
Flybe shares were down 2.7% at 125.5 pence Monday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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