Online travel agent Webjet is seeking a $250 million equity injection.The company's bankers were crossing fund managers on Monday, seeking to shore up their support for both Webjet and the mooted raising.
The proposed $250 million deal was to be split into a placement and entitlement offer, according to terms in front of funds, with the institutional components due to be run on Wednesday.Proceeds would be used to shore up Webjet's near term liquidity in light of a near shutdown of the domestic and global tourism industries.The biggest question, though, was price.
Funds and the bankers are yet to agree to any terms.The price will determine exactly how painful the offer will be for Webjet and its shareholders and dictate how many new shares need to be issued to get to the $250 million target.Credit Suisse, Goldman Sachs and Ord Minnett are working on the equity raising.Webjet shares last traded at $3.76 on Wednesday, March 18. Fund managers expect the deal would need to be priced at as much as a 50 per cent discount to the last close to attract the required interest.At a 50 per cent discount, Webjet would need to issue more than 130 million new shares or nearly double its shares on issue.It remains to be seen whether the deal gets away.Once the investment banks have determined the price they would be willing to underwrite the deal, it's expected to be put to Webjet's board. Webjet is also mulling alternative proposals, including a funding offer from private equity firm KKR.Interestingly, the institutional components of the raising were to be underwritten, while the retail entitlement offer would be only "partially underwritten", according to terms in front of funds.
WEB Price at posting:
$3.76 Sentiment: Sell Disclosure: Held
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