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(Alliance News) -Â easyJet PLC on Thursday said it is planning to raise GBP1.2 billion in a fully underwritten rights issue, sending shares plummeting.
The budget airline added that it recently rejected an unsolicited preliminary takeover approach. The unnamed bidder has since confirmed it is no longer considering a deal, EasyJet said.
"The indicative proposal took the form of a low premium and highly conditional all-share transaction which, in the board's view, fundamentally undervalued the company. In deciding to reject it, the board took into account all relevant factors including the highly conditional nature of the proposal and the certainty and strategic opportunity that the rights issue presented to the company," said easyJet.
Shares in easyJet were down 10.8% at 704.00 pence in London early Thursday, making it the worst performer in the FTSE 250 index in opening trade.
The carrier said the rights issue will help accelerate its recovery from the pandemic and provide it flexibility to pounce on investment opportunities.
As the European aviation market recovers, easyJet expects opportunities to arise at slot-constrained airports as airlines restructure short-haul operations and regulators tighten up on state aid handed out during the pandemic.
Alongside the issue, it has secured new bank financing commitments to boost liquidity. It has agreed a new four-year senior secured revolving credit facility of USD400 million.
"Since the onset of the pandemic, we have undertaken decisive and robust action to restructure our operations, addressed our cost base and secured our financial position, keeping our investment-grade credit rating. We have worked hard to maintain our customer friendly brand and network and been rewarded with immediate growth in demand when travel restrictions have been lifted," said Chief Executive Johan Lundgren.
easyJet said UK domestic capacity in August was more than double pre-pandemic levels, while intra-EU capacity was at 81%.
It expects capacity in the fourth quarter of its financial year, which ends September 30, to strengthen to 57% of pre-virus numbers, compared to just 17% in the third quarter. Then in the first quarter of the 2022 financial year, passenger numbers are expected to reach up to 60% of pre-pandemic levels.
"This capital increase will allow us to build on our fundamental operational strengths and network strategy for our customers as well as accelerate long-term value creation for our shareholders," said Lundgren.
By Lucy Heming;Â lucyheming@alliancenews.com
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