23 November 2001 – Financial Times
By Kevin Done, Aerospace Correspondent
The Reuben brothers, the billionaire UK property developers, are stepping in as backers of Silverjet.
The first UK all-business class airline said it was seeking £22m of fresh funding to finance expansion and to meet higher-than-expected losses in its first year of operations.
Silverjet said it was raising £10m in a convertible loan from TFB (Mortgages), a Reuben brothers company, and was raising additional gross proceeds of £12m through an issue of new shares.
The airline, which is listed on Aim, raised net proceeds of £25.3m in an initial public offering in May last year and £24.6m in a further share offering last April.
Its share price, which reached a peak of 209p in March after the company was floated at 112p a share, has fallen steeply, touching a low of 68p in early September. It closed last night down 4½p, or 6 per cent, at 71½p.
Silverjet said it was planning to issue 20m new shares in the placement at 60p a share – a 21 per cent discount to Wednesday’s closing price of 76p. The shares have been placed conditionally with institutional investors, including some current holders, by Arden Partners, Silverjet’s nominated financial adviser, and Kaupthing.
The £10m loan is convertible by TFB, by no later than February 11, into 18.3m shares. If the loan is converted the Reuben brothers will hold about 22 per cent of the Silverjet equity and will gain two seats on the seven- member board.
David Reuben said: “We are long-term investors in the sector and look forward to helping Silverjet accelerate its development and growth.”
The airline yesterday reported a pre-tax loss of £13.1m for the six months to the end of September, following a loss of £18.2m in the 12 months to the end of March. According to analysts, the airline is forecast to become profitable in its next financial year to March 2009.
Silverjet started flying in January on its first route between London Luton and New York Newark airports. It added a second daily service to New York in September and launched its second route between Luton and Dubai earlier this month.