Lonrho Plc (LAF), the industrial company with major interests in Africa, is to list its aviation division on the London Stock Exchange and create Fastjet, an African low cost airline, in conjunction with Sir Stelios Haji-Ioannou and Easygroup.
The group said on Wednesday it would dispose of its aviation business, Lonrho Aviation, to Rubicon Diversified Investments Plc, an AIM listed investment company, for US$85.7 million.
The consideration consists of 1,150,537,455 Rubicon ordinary shares calculated at a notional value of 4.8 pence per share. Lonrho currently holds 9.5 million ordinary shares in Rubicon and, as a result of the transaction, the company's enlarged shareholding in Rubicon on completion of the transaction will be 1,160,037,455 ordinary shares - comprising 73.7% of its enlarged issued share capital.
A meeting of Rubicon's shareholders, for the purpose of approving the transaction, has been convened for June 29.
As part of the transaction, Sir Stelios Haji-Ioannou's easyGroup Holdings will own 5% of the ordinary share capital of Rubicon, as enlarged by the transaction.
Following completion Rubicon will pursue a strategy of developing a low cost African airline utilising the Lonrho Aviation route network and existing platforms. Under a licensing agreement with easyGroup, the airline will be branded FastJet and will use modern jet aircraft and operate to European standards.
Commenting on the transaction, David Lenigas, Executive Chairman of Lonrho, said “Lonrho has completed its investment programme into its aviation division and has successfully created a unique aviation network in Africa. The next step in the growth of the business requires a World class aviation team to develop the business to meet the growing demand for a scheduled regional airline in Africa.
“I am delighted that Sir Stelios Haji-Ioannou and easyGroup have studied this market and concluded that the Lonrho aviation division provides a unique entry platform for the development of a true low cost carrier for Africa, to be branded FastJet,” he added.
“The combination of Lonrho's experience in Africa; the aviation experience of Sir Stelios Haji-Ioannou and easyGroup; the route network and operations already established by Lonrho Aviation across Africa and Rubicon's cash resources will enable Fastjet to quickly develop its low cost airline,” Lenigas concluded.
The background to the deal is the completion earlier this year of Lonrho's four year programme of developing operational hubs in East, West and South West Africa for Lonrho Aviation.
Lonrho Aviation's strategic hubs operate in Kenya, Tanzania, Ghana and Angola, providing an unparalleled route network and operating platform to launch across Africa.
In addition to the partnership with easyGroup, a key benefit of the transaction to Lonrho is the substantial cash resources held by Rubicon (GBP8.8 million as at 31 December 2011) which will be available for continued investment in the airline business.
Fastjet will focus on developing a true low cost airline for Africa based on the existing Lonrho Aviation platform which, in its existing operations as Fly540, had turnover of US$57 million and carried 525,375 passengers in the 15 months to December 2011. Passenger loads continue to increase with Fly540 carrying 53,225 for the month of May 2012, Lonrho said. - I-Net Bridge