The sizeable amount of money that Webjet had to return to its clients is what is thought to have been part of the deterrent for investors to participate in an equity raising for the online travel agency.
The raising is understood to be off the cards for the time being after a bookbuild was scheduled for Wednesday.
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.
The transaction also was not underwritten, and there is a view in the market that many people will not travel for some time, even after the bans are lifted.
Webjet made attempts to tap the market after its revenue dried up on the back of global travel bans introduced to help curb the spread of the coronavirus.
A term sheet was sent to investors for a bookbuild scheduled for Wednesday for Webjet, with pricing details and the exact size of the raising still to be confirmed.
Sources said they believed that Webjet hoped to raise $250m at about $2 a share — a significant discount to its last traded share price of $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 composition and better positioned to withstand the coronavirus crisis.
It is understood that they may be prepared to support a raising once Flight Centre, which is being advised by Luminis Partners, had raised funds.
Private equity firm Kohlberg Kravis Roberts is weighing a possible investment.
The online travel agent’s shares have not traded since late last week.
Webjet’s share price was at $14 and its market value nearly $2bn in January before governments around the world banned non-essential travel to curb the spread of the coronavirus, and now its market value is just $509.9m.
Working on the possible raise were Goldman Sachs, Ord Minnett and Credit Suisse.
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