easyJet (London Luton) is planning to raise around GBP1.49 billion pounds (USD2.05 billion) in fresh capital after rejecting a take-over offer from a third-party - reported by Reuters to be Wizz Air Holdings.
The UK-headquartered budget airline said in a stock exchange disclosure that its board had recently received an unsolicited preliminary takeover approach which took the form of a low premium and highly conditional all‐share transaction. After careful evaluation, it said, the board unanimously rejected the offer as, in their view, it "fundamentally undervalued" the airline holding. The bidder has since confirmed that it is no longer considering an offer for its rival which, had the merger been agreed to, would have helped create a rival to Ryanair (FR, Dublin International), Europe's largest budget airline by market share and fleet size. Wizz Air did not comment on the report.
As it stands, easyJet is now pursuing a fully underwritten rights issuance in the hopes of raising GBP1.2 billion pounds (USD1.65 billion) as well as a new four-year senior secured revolving credit facility of USD400 million.
Proceeds will be used to help restore easyJet's balance sheet amid lingering affects from the COVID-19 pandemic. It will also enhance the group's liquidity, and strengthen its credit ratios. To help tide itself through the crisis, easyJet has so far managed to access around GBP2.9 billion (USD4 billion) via term loans, revolving credit facilities, the UK government's Covid Corporate Financing Facility, bonds, and aircraft sales/lease-back transactions.
"The capital raise announced today not only strengthens our balance sheet enabling us to accelerate our post‐COVID‐19 recovery plan but will also position us for growth so that we can take advantage of the strategic investment opportunities expected to arise as the European aviation industry emerges from the pandemic," Johan Lundgren, Chief Executive of easyJet, said.
"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. 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."
