Silverjet rescued by $100m bailout from anonymous Middle East investor

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The Independent Online

Silverjet Airlines, the last business class airline left standing after its only remaining rival, Eos Airlines, shuttered earlier this week, has secured a $100m (£50m) rescue deal from an anonymous Middle East investor.

The deal is a triumph for Lawrence Hunt, the chief executive, who has been in talks with suitors about a takeover or capital injection amid a rapidly worsening market for airlines around the world. Eos, the best-capitalised business class only carrier, ceased operation this week after burning through $212m from private equity backers. Nationwide Airlines, a budget carrier that flew from Gatwick to South Africa four times a week, shut down as well, due to the record price of jet fuel.

Silverjet was keen to point out yesterday that the bail-out did not mean talks with other suitors had ended, and that discussions continue. The injection will keep it flying for the foreseeable future, but it is not a done deal. Under the agreement, the company will receive an initial $25m injection, broken down into cash and equity. The $8m equity portion must be approved at an extraordinary general meeting by investors who will be heavily diluted. The unnamed investor would become the single largest shareholder with a 28 per cent stake in the company via new shares priced at 17p apiece. In the interim, the investor will make $17m in debt available to provide immediate relief to Silverjet's capital position that it said has "deteriorated" in recent weeks.

Silverjet shares increased 17 per cent on the news to 17p, the level at which the new investor would buy the stake. The investor, who will be granted two seats on the Silverjet board, has also agreed to invest up to another $75m to fund its roll-out in the Middle East, Asia, and Africa.

Maxjet, another business class only carrier, went into administration last year.