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Fastjet Group is set to add a trio of ATR72-600s following a disclosure that it intends to fund their induction through a USD12 million loan from equity partner, Solenta Aviation Group. The aircraft, known to be msn 1047 and 1060 (leased from Azul Linhas A�reas Brasileiras) and msn 1072 (leased from ATR Leasing), are part of a Letter of Intent (LOI), signed with ABRIC Leasing Limited, in September last year, wherein the Tanzania-based low-fare airline would secure the turboprops on a 10-year operating lease, with the option of acquiring them. Under the LOI, Fastjet is due to pay ABRIC's parent firm, ACIA Aero Capital Group of Companies (ACIA), an option deposit of approximately USD11 million to acquire the economic rights to the aircraft. The Avions de Transport R�gional turboprops will allow Fastjet to access runways and markets previously inaccessible due to its historic jet-only fleet, whilst also complimenting existing aircraft types in between the 50- and 100- seater gauge sizes. Among the markets where they may be deployed include South Africa (via Fastjet South Africa), Tanzania (via Fastjet), Mozambique (via Fastjet Mozambique), and possibly Zimbabwe (via Fastjet Zimbabwe). "We are excited by the expected entry-into-service of turboprop aircraft during June 2018," Fastjet CEO Nico Bezuidenhout said. "This aircraft type serves a particular purpose in that certain short-haul routes with shorter runways now become accessible to Fastjet, whilst the fuel-efficient nature of the aircraft will stand us in good stead in an environment where fuel prices have shown an upward trend." As such, Fastjet said in a London Stock Exchange filing that it had entered into a USD12 million loan facility agreement with Solenta to fund the option deposit as well as to provide general working capital. Among the securities Fastjet has put down for the loan include the Fastjet trademarks, its shares in Fastjet Zimbabwe (FN, Harare Int'l), the shares to be acquired by the group in Federal Air (7V, Durban Virginia) (if and when acquired), and the economic rights of the group to be acquired in the three ATRs. The security includes a Solenta right to nominate directors to the boards of FedAir and Fastjet Zimbabwe together with an additional director to the board of Fastjet PLC.
G.BOAE, Thank you for an informed post. My take,and concern, is that we are being positioned for takeover creep by Solenta especially if they want to reverse into a London listing.At the same time loss of access to the $5 million in Zimbabwe, temporary but for how long,must be squeezing working capital to the extent that current operations must be under.some pressure.
Rufiji, you have aired my concerns, and what I think Solentas longer term objectives are. I guess the question(s) then becomes... - is takeover by Solenta a bad thing?? - what will this mean for current shareholders??
Fatherelmer, if we remain in the game, say with Solenta paper, I guess that is no bad thing given that Solenta seems to be well regarded in this part of the world. But if we are bought out with cash I cannot see too much premium on the current share price, all the more so if the Zimbabwe induced liquidity squeeze forces FJET's hand.
Getting profits out of Zimbabwe is not going to be easy either in the short term or the long term. Indeed getting monies repatriated from most African countries is never easy. I remember both BCAL and Virgin Nigeria gave up in the end and stopped operating there. Maybe the answer is to use the Zimbabwean cash to grow operations out of that country, but even that could be problematic as sooner or later spares, maintenance and fuel need to be paid for in foreign currency and may not be allowed by the treasury! Let us hope the new regime is more open to the benefits that modern transport can bring to the economy.
While no guarantee, a new regime must be a positive and hopeful development for the reasons you suggest, G-BOAE.