REG - Gama Aviation PLC - Trading Update and Proposed Tender Offer

Gama AviationAnnouncement

05/02/2024 14:30

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RNS Number : 0650C  Gama Aviation PLC  05 February 2024

 

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 31(st) 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/
(http://www.gamaaviation.com/)

 

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