Date: 05 February 2024
The
information contained within this announcement is deemed to
constitute inside information as stipulated under Article 7 of the
Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act
2018.
Gama Aviation Plc (AIM:
GMAA)
("Gama Aviation" or the "Company" or "Group")
Full Year 2023 Trading
and Liquidity Update
and
Proposed Tender
Offer
Gama Aviation Plc (the "Company") is
today providing an update on its full year trading and liquidity to
31st December 2023 and announcing a proposed capital
return by way of tender offer.
Full Year 2023 Trading and Liquidity Update
On 3 November 2023, Gama
Aviation announced that it had completed the sale of the Group's US
MRO Business (trading as "Jet East")
for a value of approximately US$131m on a cash
free/debt free basis with normalised working capital,
realising net proceeds of approximately US$100 million. The Company has estimated that
the Group's consolidated profit on disposal of this business will
be in excess of $80m.
Accordingly, for the purposes of
reporting its full year 2023 results, the Group will be treating
the US MRO business as a discontinued operation.
FY23 Trading: Continuing Operations
The overall Group revenue from
continuing operations is expected to be in the region $145m (2022;
$168m).
Whilst there have been some
variances in the performance across the business units, adjusted
EBIT from continuing operations is anticipated to be broadly in
line with management expectations.
Discontinued US MRO operations
Revenue from the discontinued US MRO
operations for the period ended 3 November 2023 is estimated to be
in the region of $127m.
Liquidity and Net Bank Debt
As a result of the receipt of the
Jet East sale proceeds, the Group ended the year with a strong
balance sheet.
As at 31 December 2023, the
Group held net cash of $82m (2022 net debt: $13.7m) comprising cash
balances of $92m less total debt (excluding lease obligations) of
$11m.
The Group intends to deploy the cash
in current and near-term working capital requirements, certain
capital requirements in particular funding requirements for the
Group's commitments to the FBO and hangarage projects in Sharjah
and Jersey, growth in strategic business units in particular
Special Mission, and a return of capital to shareholders (as
described below).
Proposed Tender Offer
On 18 October 2023
Gama Aviation announced the disposal of the
Group's US MRO Business (trading as "Jet East") for a value of
approximately US$131 million on a cash free/debt free basis,
realising net proceeds of approximately US$100 million.
The sale completed on 3 November 2023. Further, the Company
reported that the Directors would review the current and future
capital requirements of the Group, and any such constraints on
returning funds to shareholders as may apply and expected to return
a substantial proportion of the net proceeds to shareholders.
This was envisaged to be not less than £36.8 million ($46.7
million), equating to 55 pence per share on a fully diluted basis
including options.
The Directors have now completed
their review of capital requirements. In particular, the
Directors have carefully considered the current and near-term
working capital requirements of the Group without the benefit of
the positive operating cashflows it had previously derived from the
Jet East business. The Directors also carefully assessed the
levels of capital funding required to execute and deliver the
Group's strategic objectives. This includes the capital
funding requirements for the Group's commitments to the FBO and
hangarage projects in Sharjah and Jersey, which are targeted for
completion in March 2025 and 2026 respectively, as well as the
capital required to fund growth in the Group's other strategic
business units, particularly in Special Mission.
The Group does not currently utilise
any credit facilities, other than for a circa £9m amortising term
loan secured against specific aircraft deployed in support of
long-term contracts. The Directors believe that the capital
requirements of the Group should be supported by an appropriate
level of debt funding, which the Group is actively seeking, and
this was factored into the Board's initial assessment of the amount
that could be returned to shareholders. However, whilst the
Board would have preferred to make the envisaged capital return
immediately, given the continuing uncertainties as to the
availability of debt funding on reasonable terms, the Board has now
determined that it would be prudent to retain sufficient funds in
the business so as to be able to fully meet its near-term capital
requirements.
Against this background the Board
has concluded that a phased return of capital to shareholders is
appropriate. Accordingly, the Board has decided to make an
initial return of £16.5 million available to all shareholders with
a further return to be made when the appropriate debt facilities
are secured.
In view of the significant change to
the Group's business resulting from the sale of the US MRO
business, the Board believes that shareholders should be afforded
the opportunity to review their investment in the Group. The
Board is also mindful of the lack of liquidity in the Company's
shares, which may constrain the ability for shareholders to sell
shares without an adverse effect to the market price. The
Board therefore propose to effect a return of capital by way of a
tender offer that would give shareholders the opportunity to tender
all, some or none of their shares back to the Company. The
proposed tender offer price will be 95 pence per share. Given
the £16.5 million amount of the return, the maximum number of
shares that can be acquired by the Company will be circa 17.5
million shares representing approximately 27% of the current issued
share capital. Accordingly, the number of shares that
shareholders can sell to the Company may be scaled back compared
with the number of shares tendered, depending on the level of
interest in tendering shares from other shareholders.
The proposed tender offer remains
conditional on shareholder approval. A circular containing a
more detailed explanation of the capital review, the tender offer
and the resolutions required to be passed to effect the tender
offer will be sent to shareholders in due course.
Dial Partners LLP is acting as
Financial Adviser to the Company.
ENDS
Contacts
Gama Aviation Plc
Marwan Khalek, Chief Executive
Officer
Michael Williamson, Chief Financial
Officer
Tel: +44 125 298 4515
Dial Partners LLP, Financial Adviser
Angus Russell, Partner
Sandor de Jasay, Managing
Director
Tel: +44 207 098 7098
WH
Ireland, Nominated Adviser and Broker
James Joyce, Director
Tel: +44 207 220 1666
Camarco, PR
Geoffrey Pelham-Lane
Ginny Pulbrook
Tel: +44 203 757 4992
Gama Aviation - Notes to Editors
Founded in 1983 with the simple
purpose of providing aviation services that equip its customers
with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA) is a
highly valued global partner to blue chip corporations, government
agencies, healthcare trusts and private individuals.
The Group has three global
divisions: Business Aviation (Aircraft Management, Charter, FBO
& Maintenance), Special Mission (Air Ambulance & Rescue,
National Security & Policing, Infrastructure & Survey,
Energy & Offshore); and Technology & Outsourcing (Flight
Operations, FBO, CAM software, Flight Planning, CAM & ARC
services).
More details can be found
at: http://www.gamaaviation.com/