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Silverjet Is Trying To Avoid EOS' Fate

Business-class airline Silverjet says it has investor to keep it flying

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Apr 30, 2008

LONDON — Business-class airline Silverjet PLC, strained by high fuel prices and tight credit conditions, said Wednesday it had found a Middle East investor willing to pump US$100 million into the airline to keep it flying.

The airline, which runs services to Newark airport in the U.S. and to Dubai from its base at London's Luton Airport, said it had signed a memorandum of understanding with the unnamed investor to invest an initial US$25 million in debt and equity in the company and an intention to invest a further US$75 million in its future development.

Silverjet said it anticipates that the initial investment will include about US$8 million of equity representing about 28 percent of the company's enlarged share capital. It also believes the debt facility will be made available immediately.

In its statement, Silverjet said fuel price rises and tightening credit markets meant its working capital had deteriorated and the investment was urgently required to secure its future. If the deal falls through, the airline will have to urgently secure alternative funding as its reserves are limited.

The investor, based in the United Arab Emirates, will get two seats on Silverjet's board as part of the deal.

Silverjet and U.S. peers MAXjet Airways Inc. (MAXJ.LN) and EOS started business-only services from London to New York in 2006. But they have struggled as fuel costs have risen and they have failed to fill enough seats on their planes.

Late last year, MAXjet ceased operations and filed for bankruptcy protection after failing to find the necessary funding to stay in business, while Eos took the same steps over the weekend.

Earlier this month, Silverjet said it had failed to make an operating profit as targeted in March and said it was in talks with unnamed suitors that could lead to a takeover offer.

Silverjet said the additional investment of US$75 million by the new investors would be used to push Silverjet into new markets in the Middle and Far East and Africa.

Business-class airline Silverjet says it has investor to keep it flying

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