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Silverjet's woes continue
- Created:
- 12 February 2008
- Written by:
- Stephen Gunnion
Silverjet 's woes continue, with TFB Mortgages, the Reuben brothers' company that lent it £10m last year, shelving plans to convert its loan into equity. The move means Silverjet will be left paying interest on the loan until December 2009.
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The loan was part of a £21m refinancing announced in November last year. The Reubens had the right to convert it into 18.3m new shares at a rate of 60p a share on 11 February. However, Silverjet shares closed at 24p on Friday, well below that level. Analysts at Daniel Stewart say their model currently shows a loss of £29.1m for the year to March 2009, £1.4m worse than it previously expected. About half of the difference was due to this latest news from Silverjet.
Last week, Silverjet said it expected the airline to report is first month of profits in March. However, analysts believe its aircraft will need to be 70-75 per cent full in order to achieve that. Silverjet reported a load factor of just 54 per cent in January. Chief executive Lawrence Hunt says February's load factor should exceed 60 per cent, while forward bookings beyond February continue to be strong. Mr Hunt says the relationship with the Reuben brothers remains strong and they are working together on a number of projects relating to the future development of the airline.
IC VIEW:
FairlyPriced
While news that the Reuben brothers will not convert their loan into equity can come as no surprise due to the level the shares are trading at, it still highlights the concern the market has over Silverjet's business-class-only model in the current difficult market. So, until the airline proves its sceptics wrong, its shares remain fairly priced at 22p.
Last IC view: Fairly priced, 31p, 5 February 2008.
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-IC-2.0.0c-prod - 09/02/2010 08:33:38 - ben.wheeler
