Dart stock up 17% as Jet2 owner sells £172m shares

Shares of Leeds-based Dart Group, owner of Jet2.com and Jet2holidays, rose about 17% on Thursday after it announced it raised £172 million in a sale of shares via a placing following a relatively positive trading update late on Wednesday.

“A total of 29,781,894 placing shares have been placed at a price of 576.5 pence per placing share to raise gross proceeds of approximately £172 million,” said Dart.

“Canaccord Genuity acted as joint global co-ordinator, joint bookrunner and joint broker, and Barclays and HSBC acted as joint global co-ordinators and joint bookrunners.

“The placing was significantly oversubscribed.

“The placing price is equal to the closing mid-market share price of 576.5 pence on 20 May 2020.

“The placing shares being issued represent 20 per cent. of the existing issued ordinary share capital of Dart immediately prior to the placing.

“The company consulted with a number of its major shareholders prior to the placing in order to adhere to the principles of pre-emption as far as possible through the allocation process and is pleased by the strong support it has received from existing shareholders and new investors.”

Announcing the placing late on Wednesday, Dart also said: “In addition to the proposed placing, the directors consider that the group’s existing lending banks are supportive and recognise the strength of Dart’s business model.

“The company is in discussions with them to extend debt facilities and agree longer-term covenant resets, which are appropriate for the new outlook.

“As an indication of that support, Dart has already received agreement from the group’s existing lending banks to waive the semi-annual covenant test for September 2020 on its existing debt facility, conditional upon a minimum gross equity raise of £100m.”

Dart Group executive chairman Philip Meeson said: “The group is grateful to both existing shareholders and new investors for their significant support of this equity issue at no discount to the prevailing share price.

“The board believes that the proceeds of the placing, together with the recently confirmed Bank of England £300m COVID Corporate Financing Facility (currently undrawn) and the group’s fully drawn Revolving Credit Facility of £100m, will provide the group with additional headroom to deal with this most challenging of trading environments.

“The board remains of the belief that once able to do so, our customers will be determined to enjoy the wonderful experience of a well-deserved Jet2 holiday and that Jet2.com and Jet2holidays will continue to have a thriving future, taking millions of UK holidaymakers annually to the Mediterranean, the Canary Islands and to European Leisure Cities.”

Late on Wednesday, Dart Group had published an update on its current trading, outlook and financing arrangements.

For the year ended March 31, 2020, Dart said: “The board expects to report revenue of £3,752m (+19% on the prior year); pre-exceptional group profit before foreign exchange revaluation and taxation of between £265m – £270m (c.+49%); a net exceptional charge of approximately £109m relating to ineffectiveness on a proportion of FY21 fuel and foreign currency hedges; and pre-exceptional earnings before interest, tax, depreciation and amortization of £513m (+33%).”

For the year ending March 31, 2021, Dart said: “As announced in the company’s recent trading updates, Jet2.com flights and Jet2holidays holidays are currently on sale from 17 June 2020 in readiness for when holiday flights can resume, but the duration of COVID-19 related travel restrictions and thus the financial impact on the group remains difficult to determine.

“However, customers are still making bookings for late summer 2020 and winter 2020/2021 and, though still early, customer bookings and their associated pricing for summer 2021 are encouraging.”