Knocked-back Webjet aims higher on equity raising

Speculation is mounting that Webjet is looking to increase the size of its attempted equity raising from $250m to offer more certainty of the company’s prospects in the months ahead.

Some market participants believe securing such funds will be an impossible task. Last week, attempts by Webjet to tap the market for about $250m were understood to have been unsuccessful.

It is understood that fund managers shied away from the transaction because, out of the $250m it wanted to raise, $190m would go back to clients to whom the money needed to be returned at a time when revenue is down about 100 per cent.

However, now the thinking is that more funds would offer stronger prospects of the company seeing out the coronavirus crisis and capitalising on an increasing amount of travel in the aftermath, likely to be at least six months to one year away.

Last week Goldman Sachs, Credit Suisse and Ord Minnett were believed to be looking to raise about $250m at about $2 a share. Some say the group was keen to secure as much as $300m. Shares in the company, which on Monday again requested further time before it resumed trading, last traded at $3.76.

DataRoom understands shareholders had also held off supporting the raise until Flight Centre came to market seeking fresh funds, which they believe is a more compelling proposition and better positioned to withstand the coronavirus crisis.

Some think a raise by Flight Centre, believed to be working with Macquarie Capital and Luminis Partners, is imminent. Private equity firm Kohlberg Kravis Roberts is weighing a possible investment, yet the buyout fund may now be affected by a new government rule that makes any acquisition by a foreign group over the next six months subject to Foreign Investment Review Board approval. However, some say the buyout fund has serious interest in Webjet and could be the party that helps the online travel agency secure more than the $250m needed.

Webjet’s shares have not traded for almost two weeks and its market value is $509.9m, so any larger raise would be a major call by the company and its investors. In January, its share price was at $14.

Meanwhile, oOh!media’s $167m equity raising offers the outdoor advertising company the ability to navigate the choppy environment in the coming months, say Credit Suisse analysts. Last week, oOh!media secured $39m through a placement and $128m through an entitlement offer by selling shares at 53c each, a 37 per cent discount to its last closing price.