Webjet ready to pursue acquisitions after $163m raising

Webjet says it will use the $163m it is raising in Singapore to pursue some extraordinary buying opportunities.

Webjet managing director John Guscic. Picture: NCA Newswire

Online travel group Webjet will raise a further $163m in a bid to pay down debt and provide ‘firepower’ for potential mergers and acquisitions.

The raising is the second time Webjet has sought additional funding, coming on the back of the $335 million it raised on April 1 to deal with the COVID-19 led slump in its domestic and international tourism business.

“As of May 3 we had in excess of $300m of liquidity,” Webjet managing director John Guscic told The Australian, speaking from Tunisia.

“In relation to our announcement, the capital raising on April 1 was to ensure our survival until the end of 2021, and all the assumptions we made then are still valid. We have capital to the end of 2021,” he said.

“This new convertible note provides an extension of that liquidity to give us the ability to survive well into 2022 and provides us with some firepower to fund future acquisitions,” he said.

Mr Guscic said there have been some extraordinary purchase opportunities coming up over the past couple of months.

“(But) the market has been so disrupted because of the pandemic, we won’t be looking at weaker competitors, we won’t buy businesses just to bolster our balance sheet.”

Mr Guscic said key markets for Webjet, such as Saudi Arabia and Kuwait, had been shut down and for travel looked as bad as the Asian and European markets had two months ago.

“The Americas were the least affected, but last week was the worst performing in the last six to eight weeks. Europe is starting to open up. Major destinations like Spain, Italy and Greece are opening to travellers in the past week.”

“Asia has been low growth for the same period of time as Europe.”

The $160m net proceeds from the offering, after deduction of commissions, fees and other administrative expenses, are to be used to repay $50m of Webjet’s existing term debt while extending remaining term debt maturity into late 2022, Webjet said.

Shares in the company fell 2.8 per cent to $3.47 following the completion of the raising.

Webjet stressed there were no agreements or understandings with respect to any potential acquisitions or investments at this time.

In an update to the market Webjet said total revenue in April and May 2020 was “nominal” while it continued to incur about $15m per month in costs, a reduction of approximately $13m from pre COVID-19 expenditure. “Such reductions are primarily the result of the cost reduction measures undertaken by the company,” Webjet said.