easyJet plc ("easyJet", the "Group" or the "Company"), today announces its intention to conduct a non-pre-emptive placing (the "Placing") of new ordinary shares of 27 2/7 pence each in the capital of the Company ("Ordinary Shares") at the Placing Price (as defined below) (the "Placing Shares").
The total number of Placing Shares will not exceed 59,541,498 Ordinary Shares, representing approximately 14.99% of the Company's existing ordinary share capital. Gross proceeds from the Placing are expected to be approximately £400-450 million. The Placing will be conducted through an accelerated bookbuilding process (the "Bookbuild"), which will be launched immediately following release of this announcement and is subject to the terms and conditions set out in Appendix 1 to this announcement (which forms part of this announcement, such announcement and its appendices together being the "Announcement").
Part of the Placing will be conditional upon shareholder approval of an ordinary resolution; see Details of the Placing below.
This Announcement should be read in conjunction with the announcement published today relating to the Group's results for the six months ended 31 March 2020 (the "InterimResults").
Reasons for the Placing
Since the outbreak of the COVID-19 pandemic, and the subsequent grounding of the entire fleet on 30 March 2020, the Company has taken decisive actions to maximise liquidity and reduce cash burn while its fleet has been grounded. These actions include:
· Significant measures to drive down costs resulting in a c.70% decrease in operating cost cash burn during the grounding period and negotiating extended payment terms with many of its major suppliers
· Delivering vastly reduced capex over the next two years through the deferral of 24 aircraft deliveries beyond FY2025, whilst maintaining excellent fleet flexibility. The Company will take no aircraft deliveries in FY2021 and has retained an option to defer a further five deliveries in FY2022
· Having secured £1.7bn in additional funding through a combination of fully drawing easyJet's $500m Revolving Credit Facility, £600m issuance through the UK Government's Covid Corporate Finance Facility, £400m of proceeds from two new term loans and £301m of proceeds to date from sale and leaseback transactions, with a further £200-350m anticipated in proceeds from the final sale and leaseback transactions
· In addition, the Company has set out plans to right size the airline and its cost structure, optimise its network and reduce the size of its fleet to reflect a gradual recovery in customer demand
Together these actions have resulted in a current cash position as at 22 June 2020 of approximately £2.4bn.
The Company has also updated its scenario planning cash burn analysis for the period starting from 1 April 2020 (initially published on 16 April 2020) and now assumes that under a full grounding scenario the Company would use the following amounts of cash:
· 3 months full grounding - £1.0 billion
· 6 months full grounding - £2.1 billion
· 9 months full grounding - £3.0 billion
The Company resumed its flying programme on 15 June 2020 after 11 weeks of full grounding, somewhat ahead of the base case scenario of a 3 month grounding and cash burn is slightly better than the April forecast, principally driven by the proportion of customers choosing to rebook or take a voucher, rather than requesting a cash refund. The Company expects to increase capacity over the summer months as demand increases and government restrictions across Europe are relaxed.
The net proceeds from the Placing will further enhance easyJet's liquidity position and credit metrics, underpinning its balance sheet, which is one of the strongest in the industry.
Together with the anticipated remaining proceeds from the sale and leaseback programme of £200-350m, following the Placing the Company would expect to have a cash balance in excess of £3.0bn, providing a significant liquidity buffer to enable easyJet to navigate further grounding or protracted recovery scenarios. Additionally, following completion of the sale and leaseback programme, approximately 50% of the Company's fleet is expected to remain unencumbered, providing further funding availability. This further decisive action is intended to ensure easyJet is best positioned for long term growth, contributing to the Group's recovery and allowing it to emerge as a winner as capacity ramps up in European airspace.
easyJet acknowledges that it is seeking to issue Placing Shares amounting up to approximately 14.99% of its existing issued ordinary share capital on a non-pre-emptive basis, of which up to approximately 5.00% is subject to shareholder approval, and, therefore, members of the Company's Board of Directors and senior management have endeavoured to consult with the Company's major shareholders ahead of the release of this Announcement.
Details of the Placing
BNP Paribas and Credit Suisse Securities (Europe) Limited ("Credit Suisse") are acting as Joint Global Coordinators, Joint Bookrunners and Joint Corporate Brokers, (together, the "Banks") in connection with the Placing.
The Placing is subject to the terms and conditions set out in the Appendix 1 to this Announcement.
At the Company's annual general meeting in February 2020, the Company obtained shareholder approval to issue new Ordinary Shares of up to approximately 10% of the Company's issued ordinary share capital at the date of the Annual General Meeting. While this was considered to be appropriate at the time, in light of the unforeseen and exceptional current circumstances, easyJet is seeking to conduct a placing of up to 59,541,498 new Ordinary Shares, representing up to approximately 14.99% of the Company's existing issued ordinary share capital.
It is intended that up to 39,681,092 new Ordinary Shares (representing up to approximately 9.99% of the Company's existing ordinary share capital) will be issued under the Company's existing share capital authority referred to above (the "Firm Share Issuance" and such shares, the "Firm Placing Shares") and up to 19,860,406 new Ordinary Shares (representing up to approximately 5.00% of the Company's existing ordinary share capital) will be issued conditional on shareholder approval (the "Conditional Share Issuance" and such shares, the "Conditional Placing Shares"). Therefore, subject to the results of the Placing, the Company intends to convene a shareholder meeting, expected to be held on or around 14 July 2020, to approve the allotment of the Ordinary Shares pursuant to the Conditional Share Issuance. easyJet will shortly publish a Notice of General Meeting setting out the shareholder resolution requiring approval, and the Board's recommendation to shareholders to vote in favour of it.
The Firm Share Issuance will not require or be conditional upon shareholder approval. The Conditional Share Issuance will however be conditional upon such shareholder approval. Furthermore, completion of the Firm Share Issuance is not conditional on completion of the Conditional Share Issuance and therefore completion of the Firm Share Issuance may occur where the Conditional Share Issuance does not complete, whether by reason of a failure to obtain shareholder approval for that Conditional Share Issuance or otherwise.
The Firm Share Issuance will be settled on a T+2 basis, expected to take place on or before 8.00 a.m. on 29 June 2020, save that the Banks may, in their absolute discretion, permit certain persons who are invited to and who choose to participate in the Placing (each, a "Placee") to settle on such later date as the Banks and the Company may determine. The Conditional Share Issuance will be settled further to and conditional on shareholder approval, expected to be on a T+14 basis, on or before 8.00 a.m. on 15 July 2020. Allocation of Ordinary Shares under the Firm Share Issuance and the Conditional Share Issuance will be irrevocable once confirmed to investors.
The Placing will be conducted by way of a single bookbuild of Ordinary Shares covering both the Firm Share Issuance and the Conditional Share Issuance. Subject to the discretion of the Company and the Banks to elect otherwise, new Ordinary Shares will be allocated proportionately with the same investors across the Firm Share Issuance and the Conditional Share Issuance. An investor allocated a percentage of new Ordinary Shares under the Firm Share Issuance will also be conditionally allocated an equivalent percentage of new Ordinary Shares under the Conditional Share Issuance. Such allocations to investors are, subject to rounding, expected to equate to approximately 66.6% of investors' total allocations of Placing Shares under the Firm Share Issuance and 33.3% under the Conditional Share Issuance.
The Banks will commence the Bookbuild immediately following the release of this Announcement in respect of the Placing. The price at which the Placing Shares are to be placed (the "Placing Price") will be determined at the close of the Bookbuild.
The book will open with immediate effect following this Announcement. The timing of the closing of the book, pricing and allocations, including as between the Firm Share Issuance and the Conditional Share Issuance, are at the absolute discretion of the Banks and the Company. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.
The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with each other and with the existing Ordinary Shares, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
Applications will be made (i) to the Financial Conduct Authority (the "FCA") for admission of the Placing Shares to the premium listing segment of the Official List; and (ii) to London Stock Exchange plc for admission of the Placing Shares to trading on its main market for listed securities (together, "Admission").
Settlement of the Firm Share Issuance and Admission of the Ordinary Shares to be issued in connection therewith are expected to take place on or before 8.00 a.m. on 29 June 2020, save that the Banks may, in their absolute discretion, permit certain Placees to settle on such later date as the Banks and the Company may determine and, thus, Admission of any such Firm Placing Shares may occur later than 29 June 2020. Settlement for the Conditional Share Issuance and Admission of the Ordinary Shares to be issued in connection therewith are expected to take place on or before 8.00 a.m. on 15 July 2020. The Placing is conditional upon, among other things, Admission of the relevant new Ordinary Shares becoming effective. The Placing is also conditional upon the placing agreement between the Company and the Banks (the "Placing Agreement") not being terminated in accordance with its terms prior to Admission of the relevant Placing Shares. The Conditional Share Issuance is additionally conditional upon shareholder approval. Appendix 1 to this Announcement sets out further information relating to the terms and conditions of the Placing.
EU Ownership Considerations
EU Regulation requires easyJet (and all other airlines with EU operating licences) to be majority owned and controlled by nationals of one of the member states of the EU, Switzerland, Norway, Iceland or Liechtenstein ("EU Nationals").
easyJet believes it is well prepared for the UK's departure from the European Union. Since March 2019, easyJet has been structured as a pan-European airline group of three airlines each based in Austria, Switzerland and the UK. This ensures that easyJet can continue to operate flights both across the EU and domestically within EU countries after the UK has left the EU, regardless of the Brexit outcome.
easyJet has made good progress in meeting the European ownership requirements and approximately 47% of its equity capital is currently owned by qualifying nationals (EU member states plus Switzerland, Norway, Iceland, Liechtenstein, but excluding the UK). In the event that the UK leaves the EU without a deal and if ownership of easyJet by EU Nationals is below 50%, easyJet could invoke the provisions within its articles of association, which allow for suspension of rights to attend and vote at shareholder meetings and/or sale of shares by non-qualifying nationals to qualifying Nationals. Similar powers exist in the articles of association of other airlines, as well as in the articles of companies in other sectors that are subject to national share ownership requirements. Whilst easyJet has no current intention of exercising these powers, the position will be kept under review pending the outcome of negotiations between the UK and the EU during the transition period, along with other options.
Further detail on easyJet ownership restrictions are set out on the Company's website:
https://corporate.easyjet.com/investors/shareholder-services/eu-share-ownership