Business airline Silverjet suspends shares

[23rd May 2008]

New York scene

Business class only airline Silverjet has suspended trading in its shares on the AIM market of the London Stock Exchange as it still awaits funding from investors.

Silverjet, which offers flights from Luton airport to New York and Dubai, says it has yet to receive the full amount of a drawdown of approximately $5.0 million promised to it by Viceroy Holdings.

The airline entered into a "binding conditional agreement" with Viceroy Holdings, an affiliate of international luxury development fund Viceroy Fund, on 2nd May. Under the terms of a Loan Facility Agreement, Silverjet was able to borrow up to £8.4 million and planned to raise another £4.3 million by issuing just over 25 million shares to Viceroy at 17p per share. As part of the Memorandum of Understanding between the two parties, Viceroy also intended to invest up to a further £38 million in Silverjet.

Silverjet admitted on 30th April that its working capital reserves were limited and that advances under the Loan Facility were needed "as a matter of urgency". How much longer it will be able to operate flights if funding is not received is open to speculation.

"Silverjet continues discussions with other parties, which have confirmed an interest in investing in the company," the airline said in a statement. At the beginning of the month the business class airline reported that "forward bookings are particularly strong" and that average fares had risen to £550 in April on its flights from Luton airport to New York and Dubai.

As oil prices continue to rise and the credit crunch bites, these are worrying times for Silverjet and other airlines. Rival business class airlines MaxJet and Eos have already gone out of business within the last few months.

Written by: Nick Purdom


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