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fastjet secures £15.68 million convertible to fund growth

Direct News Source

08-Mar-2013

• £15.68 million zero coupon convertible securities allow fastjet to fund further working capital and plan for its expansion in Africa.

• Funding provided by New York based fund, Bergen Global Opportunity Fund.

• Staged funding mitigates the effect of potential dilution to existing shareholders.

The Company announces that it has entered into a convertible securities deed (the "Agreement") with Bergen Global Opportunity Fund, LP ("Bergen"), an institutional investment fund managed by Bergen Asset Management, LLC, a New York asset management firm, in connection with zero coupon convertible securities with a nominal amount of up to £15,681,750 (the "Convertible Securities").

fastjet's CEO, Ed Winter said:

"This agreement with Bergen gives us access to very significant funding over the next year on a flexible basis and will provide us with a solid platform on which to grow the business and expand our operations in Africa.

"The investment structure potentially reduces the dilution to existing shareholders and gives us the opportunity to restructure parts of the business and adapt our business model in the light of our experience so far in Africa.

"Securing this funding will assist us in our core objective of making fastJet the first pan-African low-cost airline and meeting the growing demand for air travel across the continent."

The Convertible Securities will (subject to the satisfaction of certain conditions) be issued in six tranches and the Company will make an announcement of the issue of each Convertible Security. The initial Convertible Security will have the nominal value of £2,556,750. The second Convertible Security is expected to be issued within 100 days with the nominal value of £2,625,000. Each of the four subsequent Convertible Securities will be issued 60 days after the date of issuance of the previous Convertible Security and have the nominal value of £2,625,000.

The initial Convertible Security will have an 18 month term. The subsequent Convertible Securities will have a term ending on the date that is 15 months after the date of issuance of the second Convertible Security.

The Company will have the right to repurchase the Convertible Securities for cash at their nominal value (and without a fee or penalty) within a certain redemption period. The Company will additionally have the right to terminate the Agreement at any time and not to issue the remaining Convertible Securities on payment of a modest termination fee.

The Convertible Securities will (subject to the satisfaction of certain conditions) be convertible into ordinary shares of the Company (the "Shares"), in whole or in part, at the option of Bergen or (in certain circumstances) the Company. The Company will make an announcement each time any Convertible Securities are converted in whole or in part and will specify in such announcement the relevant conversion price, which will be set (at Bergen's election) by reference to (a) 90% of the average of three daily volume-weighted average prices of the Shares on AIM during a specified period preceding the relevant conversion and (b) 135% of the average of the daily volume-weighted average prices of the Shares for the 20 consecutive trading days preceding the issue of the relevant Convertible Security, save that (b) may only apply in respect of up to £2,500,000 in aggregate nominal amount of the Convertible Securities.

Application will be made to the London Stock Exchange for any Shares issued and allotted on conversion of the Convertible Securities to be admitted to trading on AIM.

Bergen has agreed to certain limitations on its ability to dispose of the Shares following a conversion of the Convertible Securities.

In connection with the Agreement the Company will issue to Bergen 44,000,000 Ordinary Shares of £0.01 at par. The Company will apply for admission of these Shares to trading on AIM, and this is expected to become effective on or about 13 March 2013. Bergen may be required to make a further payment to the Company once all of the obligations of the Company under the Agreement have been finally met and no Convertible Security remains outstanding, depending on the price of Shares at such time.

The Company has agreed that it will (subject to the satisfaction of certain conditions) issue 68,000,000 warrants with an exercise period of 48 months from the date of issue (the "Warrants") to Bergen entitling Bergen (or any subsequent holder of the Warrants) to subscribe for one Share per Warrant at the exercise price equal to 135% of the lower of (i) the average of the daily volume-weighted average prices of the Company's shares during the 20 trading days prior to the date of execution of the warrant agreement, or (ii) the average of the daily volume-weighted average prices of the Company's shares during the 20 trading days prior to the date of the issuance of the warrants. The Company will make an announcement each time any Warrant is exercised and will specify in such announcement of exercise the relevant exercise price. Application will be made to the London Stock Exchange for any Shares issued and allotted on exercise of the Warrants to be admitted to trading on AIM.

The Convertible Securities will only be issued to the extent that the Company has corporate authority to do so. The proceeds for the issue of the Shares and Convertible Securities referred to above will be used by the Company for general working capital purposes and provide funding to launch new routes in Africa.