Mystery UAE investor in Silverjet bail-out

(PATRICK CASTILLO)

Business-class airline Silverjet, strained by high fuel prices and tight credit conditions, said on Wednesday it had found a United Arab Emirates-based investor willing to pump $100 million (Dh367m) into the airline to keep it flying.

The airline, which runs services to Newark airport in the US and to Dubai from its base at London’s Luton Airport, said it had signed a memorandum of understanding with the unnamed investor to invest an initial $25m in debt and equity in the company and an intention to invest a further $75m in its future development.

Silverjet said it anticipates that the initial investment will include about $8m of equity representing about 28 per cent of the company’s enlarged share capital. It also believes the debt facility will be made available immediately.

In its statement, Silverjet said fuel price rises and tightening credit markets meant its working capital had deteriorated and the investment was urgently required to secure its future. If the deal falls through, the airline will have to urgently secure alternative funding as its reserves are limited.

The investor will get two seats on Silverjet’s board as part of the deal.

Silverjet and US peers MAXjet Airways and EOS started business-only services from London to New York in 2006. But they have struggled as fuel costs have risen and they have failed to fill enough seats on their planes.

Late last year, MAXjet ceased operations and filed for bankruptcy protection after failing to find the necessary funding to stay in business, while Eos took the same steps over the weekend.

Earlier this month, Silverjet said it had failed to make an operating profit as targeted in March and said it was in talks with unnamed suitors that could lead to a takeover offer.

Silverjet said the additional investment of $75m by the new investors would be used to push Silverjet into new markets in the Middle and Far East and Africa.

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