Fastjet plc, the UK-based shareholder of Fastjet Zimbabwe (FN, Harare International), announced in a stock market filing on May 1 that it continues to address its capital requirements and restructuring goals and that it has secured a USD600,000 dollar shareholder loan facility agreement with Solenta Aviation Holdings Limited (SAHL). If these measures are all achieved, the company believes that it will "continue to have sufficient resources to meet its operational needs until the end of July 2020." As at April 22, the Fastjet Group had cash reserves of USD1.9 million with no restricted cash, of which USD400,000 is in Zimbabwe and currently unrestricted.
The company announced on April 7 that it would need additional funding by June 2020 to allow operations to continue. To address the funding requirement, the group is in the process of divesting its shares in the Zimbabwean carrier to a consortium of investors led by SAHL and local Zimbabwean investors. While the consortium remains committed to the disposal of the group's holding in Fastjet Zimbabwe, it might seek potentially modified terms on the deal. Discussions with the consortium will only restart when timelines of the lockdowns in South Africa and Zimbabwe are better understood.
As a result of the disposal delays, the company engaged with its main creditors to defer due dates and has so far reduced its total liabilities by USD600,000. Management remains in discussions with other creditors and has identified further discounts of between USD1 million and USD3 million, which would require additional capital for these to be realised. In the filing, the group said that such additional creditor discounts "would relieve significant pressure on the company's current balance sheet obligations in the future."
Bearing these facts in mind and based on current financial projections, the company's directors believe that it will have enough resources to meet its operational needs until the end of July 2020. However, if Fastjet is unable to complete the disposal, raise additional new capital, secure the additional creditor discounts, or the current COVID-19 travel restrictions are extended past June 2020, the airline's directors believe that the company would be unable to continue trading as a going concern beyond July 31, 2020.
As fixed costs continue during the lockdown and in anticipation of reduced demand for air travel following any restart of operations in the months ahead, the company has negotiated a USD600,000 loan facility with SAHL. The key terms of the loan include a fixed interest rate of 10% and an initial six-month term with the right for the company to extend twice after that for further periods of six months each, up to a maximum 18-month term.
In late April the group announced in another stock market filing that it had sold an E145 to SAHL for USD2.2 million.
Fastjet Zimbabwe is the only remaining Fastjet unit still actively operating flights. Fastjet (Dar es Salaam) in Tanzania ceased operations in 2018 after the group's exit as a shareholder while Fastjet Mozambique (Maputo) shutdown last year. It planned to launch Fastjet South Africa (Johannesburg O.R. Tambo) this year but has since deferred its plans given the impact of the COVID-19 outbreak.
