Proceeds from new capital raising to strengthen Webjet through COVID-19.
Webjet has just confirmed the suspension of its Webjet Exclusives product offering, among a range of measures to help it survive the COVID-19 downturn.
The company has announced plans to raise at least $275 million via a placement to institutions and existing shareholders, saying the proceeds would strengthen its balance sheet in the light of the continuing impact of coronavirus and associated government restrictions impacting travel across the globe.
The money is expected to be enough to provide for operating costs and capital expenditure through to the end of 2020, even if severe travel restrictions continue.
As well as axing Webjet Exclusives and Webjet Cruise, cost savings include a 60% reduction of salary for MD John Gucsic, deferral of the company’s $1.2 million interim dividend payment and 440 redundancies.
The majority of other staff will move to four working days per week, and a freeze on all non-essential spending including all marketing, resulting in a total cash flow saving of about $13 million per month.
Webjet said with its global presence it “should be well placed to capture the pick-up in travel activity once the impact of COVID-19 passes”.
Under the Entitlement Offer, eligible shareholders are invited to subscribe for new shares on a one-for-one basis, at an offer price of just $1.70 per new share.
More details in tomorrow’s issue of Travel Daily.