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CAP - Flyr AS - Unsuccessful attempt to raise capital, the board of directors to consider alternatives for continued operations

Company: Flyr AS Date: 2023-01-30 Language: English Register to download

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 Flyr AS - Unsuccessful attempt to raise capital, the board of directors to consider alternatives for continued operations

# Flyr AS - Unsuccessful attempt to raise capital, the board of directors to consider alternatives for continued operations

Reference is made to the stock exchange announcement by Flyr AS (the "Company")  

on 10 November 2022 regarding (i) the successfully placed private placement of  

25,000,000,000 new shares with a subscription price of NOK 0.01 to raise gross  

proceeds of NOK 250 million (the "Private Placement"), (ii) the subsequent  

offering of up to NOK 100 million with a subscription price of NOK 0.01, and  

(iii) the allocation of independent subscription rights with a subscription  

price of NOK 0.01 to participants in the Private Placement and the subsequent  

offering to raise up to NOK 350 million (together, the "November Financing  

Plan").  

  

In connection with the Private Placement the Company communicated that it was  

dependent on raising further capital from the November Financing Plan by the end  

of Q1 2023 to pay the Emission Trading System quotas (EU ETS) in April 2023 and  

to ramp-up for the coming spring and summer based on the Company's business plan  

and market assumptions.  

  

Following completion of the Private Placement the share price of the Company has  

traded considerably below the subscription price of the November Financing Plan,  

which meant that succeeding with the November Financing Plan became increasingly  

unlikely. As such, the Company had to consider alternatives to secure its  

financial needs.  

  

The Company's management and board of directors have worked intensively to  

achieve a viable long-term solution for the Company's operations, which would  

strengthen the business plan of the Company and increase the chances to raise  

the necessary liquidity to sustain operations. In cooperation with its financial  

advisors, the Company has explored a number of different alternatives, including  

increased wet lease operations and other strategic alternatives.  

  

Due to the global shortfall in available aircraft, the Company experienced  

stronger than expected demand for wet lease and charter operations. In mid  

\-December 2022 the Company initiated discussions with a European airline  

regarding a wet lease arrangement for the production of 6 aircraft for the  

summer season 2023, with commencement at the end of March 2023. A wet lease  

agreement for 6 aircrafts with a reputable partner would considerably de-risk  

the business case and improve the chances of succeeding with a new financing  

plan.  

  

The commercial terms of a wet lease agreement for 6 aircraft with a European  

airline was agreed in principle on 23\[rd\] December 2022, but due to the  

uncertainty of the November Financing Plan, signing of the agreement was made  

conditional on the Company securing further financing.  

  

The evaluation done by the Company and its financial advisors was that this wet  

lease agreement, which would have secured the income and a profitable operation  

for 50% of the Company's fleet for the entire period from the end of March to  

the end of October 2023, would significantly increase the probability of  

successfully implementing a new financing plan to replace the November Financing  

Plan that at this point appeared unlikely to succeed.  

  

In order to be ready to perform its obligations under the wet lease agreement  

commencing in March 2023, the Company had to reverse some of the liquidity  

preserving measures it had planned and implemented, as the wet lease agreement  

was considered instrumental in securing the new financing plan that would  

address both the short term and long-term funding requirements of the Company.  

  

After discussions with the Company's financial advisors Arctic Securities AS,  

Carnegie AS and SpareBank 1 Markets AS (the "Managers") the Company authorised  

the Managers to seek to establish an underwriting consortium for a rights issue  

to raise up to NOK 330 million, to fulfil the conditions for signing of the wet  

lease agreement and replenish the company's cash position.  

  

In spite of the de-risking of the investment case, and the support from several  

key shareholders, the Managers have not yet been able to raise the sufficient  

market underwriting, even though a rights issue would be expected to take place  

at a discount to the theoretical ex-rights share price following the capital  

raise. Market conditions and continued uncertainty with regards to airline  

travel and earnings through 2023 have deterred investors from committing capital  

for the required period of time, in spite of the Company's wet lease  

opportunities and improving tickets sale. Underwriting, or the support for a  

private placement, has been sought on a confidential basis, since a non  

\-underwritten share issue would have been insufficiently robust given the  

Company's short term financial commitments. Due to the unsuccessful process to  

underwrite a rights issue or carry out a private placement, the Company is now  

in a critical short term liquidity situation.  

  

The Company and the Board will continue its efforts to explore solutions for the  

Company, including exploring whether there are feasible alternatives to secure  

continued operations, and will revert with further information as and when  

appropriate. There is, however, no guarantee that a solution that would create a  

meaningful shareholder value for the current shareholders will be found.  

  

For further information, please contact:  

  

Investor relations  

  

Email: investors@flyr.com  

  

This information is considered to be inside information pursuant to the EU  

Market Abuse Regulation and is subject to the disclosure requirements according  

to section 5-12 of the Norwegian Securities Trading Act. The information was  

prepared by Brede Huser, CEO at Flyr AS, on the time and date provided.